Family IncomeWei- Jun Jean Yeung and colleagues analyze the Panel Study
of Income Dynamics and find a β- coefficient of 0.15 for the
effect of family income on cognitive skill.^13
Part of the reason for this is that high- income parents
spend a larger proportion of their incomes on children’s ed-
ucation than low- income parents. For example, a US study
uses two nationally representative expenditure surveys to
show that American families in the bottom family expen-
diture quintile spend 3% of their total expenditure on ed-
ucation enrichment items (e.g., preschool, drama lessons,
music lessons); families in the top income quintile spend
9%.^14
Conclusion
Lack of income is not the only source of financial difficul-
ties.^15 But the family’s income as such has a limited effect
on the emotional well- being and behavior of the children,
other things constant. There is however a stronger rela-
tion between the family’s income and children’s academic
achievement.