It’s long been accepted – with little science to back it up – that people should spend roughly a third of their income on housing. It turns out, that’s about how much a low-income family should spend to optimize their children’s brainpower. Johns Hopkins University researchers explored the effects of affordable housing on the cognitive development, physical health, and emotional wellbeing of children living in poverty. Though how much a family spent on housing had no affect on a child’s physical or social health, when it came to cognitive ability, it was a game changer. When a family spent more than half of their income on housing, their children’s reading and math ability tended to suffer, found Sandra J. Newman, a Johns Hopkins professor of policy studies, working with researcher C. Scott Holupka. Children’s cognitive abilities also took a hit a hit when families spent less than 20 percent of their income on housing….
Housing affordability and investments in children
Source: Sandra J. Newman, C. Scott Holupka, Journal of Housing Economics, Volume 24, June 2014
From the abstract:
This paper uses the 2004–2009 Consumer Expenditure Surveys to examine whether housing affordability affects expenditures on children in families with income at or below 200% of the poverty line. After accounting for selection using propensity score matching, estimating effects using nonlinear GLM, and performing sensitivity tests, we find that child enrichment expenditures have an inverted U-shaped relationship with housing cost burden, our measure of housing affordability. This result is similar to the concave pattern of the association between housing cost burden and measures of children’s cognitive achievement in reading and math. Thus, child expenditures, particularly for enrichment, may be one mechanism by which housing affordability affects children’s cognitive outcomes. The inflection point for enrichment spending occurs at roughly the 30% housing cost-to-income ratio, the longstanding rule-of-thumb for defining housing affordability.
Housing Affordability and Child Well-Being
Source: Sandra J. Newman & C. Scott Holupka, Housing Policy Debate, Published online: 29 May 2014
From the abstract:
We test three hypotheses about the role of housing affordability in child cognitive achievement, behavior, and health. Using longitudinal data from the Panel Study of Income Dynamics, we apply both propensity-score matching and instrumental-variable modeling as identification strategies and test the sensitivity of results to omitted variable bias. The analysis reveals an inverted-U-shaped relation between the fraction of income devoted to housing and cognitive achievement. The inflection point at approximately 30% supports the long-standing rule-of-thumb definition of affordable housing. There is no evidence of affordability effects on behavior or health.