Two studied from Johns Hopkins University analyzed the relationship between housing affordability and children’s cognitive abilities. The findings, published in Housing Policy Debate and the Journal of Housing Economics, show that for families with income at or below 200% of the federal poverty guideline, children have the best cognitive outcomes when about 30% of income is spent for housing. Spending much more than 30% or much less than 30% of income on housing correlates to poorer cognitive outcomes.
One of the studies, “Housing Affordability and Child Well-Being,” used data from the 1997 and 2002 Child Development Supplement of the Panel Study of Income Dynamics. The data tracked children’s cognitive ability as measured by reading and math test scores, as well as behavioral problems and physical, psychological, and emotional health. Data was limited to a sample of households with income at or below 200% of the federal poverty guideline that had at least one child between age five and seventeen in 2002. The sample covered 86 metropolitan and 58 nonmetropolitan areas.
Researchers found that housing affordability had a statistically significant effect on child cognitive ability. When families spent more than half of their income on housing, children’s reading and math test scores suffered. Children’s cognitive skills also declined when their family spent less than 10% of income on housing. According to the analysis, in order to optimize a child’s intellectual abilities, a family should devote approximately 30% of its income toward housing. When families spend too much on housing they are unable to invest in things such as books, computers, and educational outings. On the other hand, families spending too little on housing are more likely to live in inadequate housing and low-quality neighborhoods, which also adversely affect children’s development.
A second study, “Housing Affordability and Child Well-Being,” used data from the 2004-2009 Consumer Expenditure Survey to examine how housing affordability affected household spending on children 12 years old or younger who live in families with income at or below 200% of the poverty guideline. The analysis focused on three categories of family expenditures: child necessities, including food and health insurance; child enrichment, including childcare, toys, and educational outings; and total child expenditures.
Families that spent 30% of their income on housing spent more money on enrichment for their children than families that spent more or less. When a family went from spending more than half of its income on housing to spending 30% on housing, it invested an average of $98 per year more on its children. Similarly, when a family went from spending 10% for housing up to 30%, it invested an average of $170 more per year on child enrichment activities and goods.
The standard of housing affordability has long been spending 30% of income for housing. Both studies reinforce this standard by showing that the inflection point for children’s cognitive achievement and expenditures on child enrichment occurs at approximately 30%.