Utopia, you are standing in it!

Susan Mayer in her book What Money Can’t Buy found very little evidence to support the widely held belief that parental income has a significant effect on children’s life outcomes. Mayer:

• Challenged the assumption that poverty directly causes poor health, behavioural problems, and a host of other problems for children;
• Also stated that there was no correlation but a coincidence with a missing third factor, which was jobs; and
• Found that household conditions are highly responsive to income but how it is spent is what matters more.

These findings were Susan Mayer are of profound importance because far too many people believe the solution to child poverty is to give the poor more money. What could be simpler.

Capitalism have been giving the poor more money for centuries now. This great enrichment dwarfs anything that redistribution and egalitarian politics and the welfare state has done in the 20th century.

Mayer said that her findings do not endorse massive cuts in welfare:

My results do not show that we can cut income support programs with impunity…

Indeed, they suggest that income support programs have been relatively successful in maintaining the material living standard of many poor children.

Mayer found that non-monetary factors play a bigger role than previously thought in determining how children  overcome disadvantage as she explains.

Parent-child interactions appear to be important for children’s success, but the study shows little evidence that a parent’s income has a large influence on parenting practices.

Mayer said that if money alone were responsible for overcoming such problems as unwed pregnancy, low educational achievement and male idleness, states with higher welfare benefits could expect to see reductions in these problems. In reality,

once we control all relevant state characteristics, the apparent effect of increasing Aid to Families with Dependent Children benefits is very small

Mayer is of the view that many of the activities that improve children’s outcomes are more related to parenting choices than to income:

They mainly reflect parents’ tastes and values.

Books appear to benefit children because parents who buy a lot of books are likely to read to their children.

Parents who do not buy books for their children are probably not likely to read to them even if the books are free, and parents who do not take their children on outings may be less likely to spend time with them in other ways.

Among her findings, which have largely survive the test of time, are:

• Higher parental income has little impact on reading and mathematics test scores.
• Higher income increases the number of years children attend school by only one-fifth of a year.
• Higher income does not reduce the amount of time sons are idle as young adults.
• Higher income reduces the probability of daughters growing up to be single mothers by 8 to 20 percent.

Mayer found that as parents have more money to spend, they usually spend the extra money on food, especially food eaten in restaurants; larger homes; and on more automobiles.

As a result, children are likely to be better housed and better fed, but not necessarily better educated or better prepared for high-income jobs. This is her key conclusion about what money can and cannot buy:

If we are asking specifically about the relationship between parental income and children’s outcomes, a fairly clear answer is emerging: parental income itself has a modest effect on children’s outcomes and this effect is not necessarily greater for children from poor families compared to children from rich families.

Mayer’s analysis in many ways reflects her own life story. She divorced in the mid-1970s and had so many money troubles that she had trouble paying the rent.

She remarried in the early 1980s and had a second child. This second child at a comfortable middle-class upbringing. The mother went on to complete a Ph.D. and ended up as head of the Harris School of Public Policy at the University of Chicago.

Mayer noticed that both of her children turned out pretty much the same despite the older child was raised in poor circumstances. The common factor to this success was they had the same mother.