Center on Assets, Education, and Inclusion

This article considers the processes through which parents' and children's wealth may influence children's academic achievements, and examines how these processes may vary across race and gender. It starts by reviewing existing research on the wealth-academic achievement relationship, and the role of college expectations in explaining this relationship. The study used 2002 data from the Panel Study of Income Dynamics (PSID), a national annual survey of US individuals and households, to examine wealth effects in relation to children’s maths and reading scores. The analysis sample included black and white children between the ages of 12 and 18 who were enrolled in a public school, giving a sample size of 1063. The data were analysed using multi-group structural equation modelling (SEM) to examine wealth effects on maths and reading scores by gender and by race. The results suggest that there are important statistical differences across race and gender. For example, children's school savings predict maths scores among white children but not black children. Net worth is a positive predictor of black males' maths scores but a negative predictor of black females'. In the case of income, the results find that it is directly related to black females' maths scores but not black males'. In general, the findings suggest that liquid forms of wealth (i.e., forms of wealth that are easily converted into cash) may be better predictors of children's academic achievement than net worth.