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On Intergenerational Immobility : Evidence that Adult Credit Health Reflects the Childhood Environment

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Abstract

Using a novel dataset that links socioeconomic background to future credit, postsecondary education, and federal student loan and grant records, we document that, even though it is not and cannot be used by credit agencies in assigning risk, background is a strong predictor of adult credit health. A relationship remains upon inclusion of achievement, attainment, and debt management metrics. These findings reveal a new dimension along which childhood circumstances persist into adulthood and imply that the many important contexts in which credit scores are relied upon to evaluate individuals (e.g., lending, insurance, employment) may be helping to preserve inherited inequities.

Suggested Citation

  • Sarena Goodman & Alice Henriques Volz & Alvaro Mezza, 2017. "On Intergenerational Immobility : Evidence that Adult Credit Health Reflects the Childhood Environment," Finance and Economics Discussion Series 2017-032, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2017-32
    DOI: 10.17016/FEDS.2017.032r1
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    More about this item

    Keywords

    Credit Health; Credit Scores; Intergenerational Mobility; Socioeconomic Status; Student Loans;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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