When Housing Is Affordable, Families Spend More on Child Enrichment | How Housing Matters

When Housing Is Affordable, Families Spend More on Child Enrichment

February 14, 2015  
 
 
 

A widely used rule of thumb defines housing as “affordable” when it consumes no more than 30 percent of monthly income. That rule of thumb, with modest variations, has guided federal housing policy since the 1940s, although it was never empirically put to the test. New research out of Johns Hopkins University has put this rule of thumb to the test. Does spending more than (or less than) 30 percent of income on housing affect what low-income families spend on their children?

A July 2014 research brief, based on the paper “Housing Affordability and Investments in Children” by Sandra J. Newman and C. Scott Holupka, builds on the growing understanding that affordable housing, via the additional income it provides families to invest in their children, has a strong connection to children’s cognitive development. The study is also the first to empirically confirm the soundness of the 30 percent rule of thumb. Among families with incomes below approximately $30,000 a year (i.e., at or below 200 percent of the federal poverty line), those who spend 30 percent of their household income on rent spend $125 more per year on child enrichment than those who spend 10 percent of their income on rent, and $75 dollars more per year than those who spend 50 percent of their income on rent.

Major Findings:

  • The sweet spot of spending on children’s enrichment items is when families spend approximately 30 percent of their income on housing.
  • Those with the most and least affordable housing spend the least on child enrichment items.
  • Low-income families who spend 30 percent of their household income on rent spend $125 more per year on child enrichment than those who spend only 10 percent of income on rent, and $75 more than those who devote 50 percent of their income to rent.
  • The findings empirically support the rule of thumb that “affordable” housing is roughly 30 percent of household income.

Photo of Emerald Vista by Eden Housing, Courtesy of JZ Lim Photography

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Author: Sandra J. Newman, C. Scott Holupka
Download the Brief

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