Panel Paper: Housing Affordability and Child Well-Being

Friday, November 9, 2012 : 1:40 PM
Mencken (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Sandra Newman and C. Scott Holupka, Johns Hopkins University

There is general agreement that the main housing problem confronting low-income households in the U.S. is unaffordability.  Despite estimates that the majority of  renters in the lowest income quintile spend half or more of their incomes on housing costs, there is little research on the effects of housing affordability on residents.  Children may be particularly vulnerable because high housing costs relative to income may force low-income families to cut back on purchases of key necessities such as food or medical care, or create undue parental stress resulting in harsh or punitive parenting.  Whether direct or indirect, such effects are likely to compromise child well-being.  But often ignored in debates about housing affordability is that high-priced housing markets, on average, offer high quality schools, low crime rates, and other features that are likely to benefit poor children.   

            In this paper, we use the large, nationally representative Panel Study of Income Dynamics and its 1997 and 2002 Child Development Supplements to explore the effects of housing affordability on the cognitive achievement, physical health, and emotional and psychological well-being of children 5-17 years of age whose family incomes were no more than 200 percent of poverty on average during their childhood.  We apply two different techniques--propensity score matching and instrumental variable analysis--to support causal inference, and control for a wide array of community features and amenities in order to interpret our results as the effects of housing affordability per se.    Results strongly suggest a U-shaped relationship, with the worst child outcomes when families devote more than 50 percent of their incomes to housing, but also when they devote 20 percent or less of their incomes to housing.   There are strong indications that compromised child well-being occurs at the low end because children are living in inadequate housing and poor quality neighborhoods, and at the high end because of the direct effects of material hardship and indirect effects operating through parenting.