Net Worth Poverty and Child Development: The Importance of Wealth
Lisa Gennetian, Christina Gibson-Davis1, Lisa Keister1, Santiago Deambrosi1
1Duke University

This study provides the first estimates as to how net worth poverty is associated with child well-being. Data come from the Panel Study of Income Dynamics and its Child Development Supplement on more than 7,000 children observed between 1997 and 2014. Children were classified into one of four mutually exclusive categories: not poor, income poor, net worth poor, or both income and net worth poor. Preliminary estimates indicate that children who experienced net worth poverty – either alone or in combination with income poverty – were associated with decreases in cognitive scores and increases in behavioral problem measures. These associations were robust across age range, and for younger children, the effects of income and net worth poverty on cognitive outcomes were statistically significantly larger than those of income poverty alone. Net worth poverty, though overlooked in conventional assessments of economic scarcity, may pose a risk to the well-being of children.