2004 Reports

Measuring Economic Disadvantage During Childhood: A Group-Based Modeling Approach

Wagmiller, Robert L.; Lennon, Mary Clare; Alberti, Philip M.; Aber, John Lawrence

Recent research suggest that child well-being and subsequent status attainment are influenced not only by the overall magnitude of exposure to family economic disadvantage during childhood, but also by the age of exposure and significant changes in family economic circumstances. Unfortunately, traditional measures of children's economic deprivation, such as permanent and transitory income, persistent or cumulative poverty, and the number and length of poverty spells, fail to differentiate between exposure to disadvantage at different stages in childhood and largely ignore how family economic circumstances are changing over time. In this paper, the authors propose a new method for assessing economic disadvantage during childhood that captures both children's overall levels of exposure to economic disadvantage and their patterns of exposure. This new method, which takes advantage of recent advances in finite mixture modeling, uses a longitudinal latent class model to classify children into a limited number of groups with similar histories of exposure to family economic disadvantage. Using this new methodology, group membership can be related to both family background characteristics and achievement in childhood and early adulthood, making it possible both to assess how family characteristics affect patterns of exposure to disadvantage during childhood and directly test alternative theories about the effect of different patterns of exposure on achievement. In this paper, the relationship between background factors, such as race, parental education, and family structure, and group membership is investigated, as is the association between group membership and achievement in early adulthood. The use of this technique is demonstrated using data from the Panel Study of Income Dynamics (PSID).