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Family Characteristics and Social Inequality

Are Wealth and Parenthood Connected?

Over the last several decades, raising a child has become increasingly more expensive, yet previous research shows inconsistent evidence about how parenthood affects wealth. In Sociological Science, IPR social demographer Christine Percheski and Christina Gibson-Davis of Duke University examine how wealth and parenthood are connected. They analyze data from the 1989 through 2019 waves of the Survey of Consumer Finances (SCF), a cross-sectional survey of U.S. families conducted by the Federal Reserve, for 41,625 households where the head of the household is younger than 65 years old. The survey included information on net worth, parental status, demographics, household income, and wealth-building behaviors for each household. On average, parents have almost three times as much median wealth as those without children. This difference partly reflects differences in demographic characteristics, such as age and education. But more importantly, there are huge differences in wealth among parents. Even accounting for differences in age, education, and other characteristics, married parents have had the highest levels of wealth consistently across the last 30 years. Mothers who have never been married, divorced mothers, single fathers, and co-habiting parents had lower average levels of wealth than married parents. What explains this? One factor is home ownership. Married-parent couples were substantially more likely to own homes than adults in any other household types. This pattern raises important questions about economic inequality resulting from policies that subsidize and promote homeownership.

Can Joint Bank Accounts Improve Marriage Quality?

Organizing finances is an important step for newlyweds, and it may set the tone for the rest of their marriage. In the Journal of Consumer Research, IPR social psychologist Eli Finkel and his colleagues investigate whether combining money into a joint account improves relationship quality across two studies. In the first study, the researchers conducted a two-year experiment with 230 male-female couples who had separate bank accounts and were engaged or newly married. They instructed 96 couples to merge their accounts, 66 couples to keep their accounts separate, and 68 couples to maintain any account structure they liked. In a second study, 507 married individuals were surveyed about their banking habits, financial harmony, communality, and alignment of financial goals within their marriages. During the first year of the first study, the researchers surveyed each partner individually once every three months and again at the end of the study. They measured the couple's satisfaction, conflict tactics, and how well they interacted to determine their relationship quality. To better understand the couple's financial harmony, the research team asked each partner how much they agreed with statements about financial habits in their marriage. In both studies, couples who combined money in a joint account maintained their relationship quality and increased financial harmony. The results provide causal evidence that joint accounts preserve relationship quality in the first few years of marriage, a critical period when the dynamics that couples develop predict how their relationship will progress.