Gifted Issues Discussion homepage Forums General Discussion NYT opinion: No (rich) child left behind

To get back (way back) to the original subject at hand: I just read some reserach about parental investment in children from the 1970s to 2009 or so. While the study authors do make a bit of a fuss about--oh, look, look, wealthy parents are spending proportionally more and LOOK, the rich-poor achievement gap has widened at the same time this has happened, I will again note that this is HIGHLY SPECULATIVE. They're just noting two things that have happened at the same time. So what? We all know about that kind of error.

Furthermore, this particular paper shows that wealthy parents are spending more on early childhood care (daycare) and higher education (college)--AND they are forking over more money to their ADULT children. Yes. You read me right. The wealthy parents who are making their kids so fantastically successful? They're giving their 20-somethings money. Not my personal metric of success. Meanwhile, spending in the 6-12 age range was fairly low. So, basically, daycare and college are expensive, and rich people spend even more on these things. Not surprising.

http://link.springer.com/article/10.1007%2Fs13524-012-0146-4 (paywall, probably)

This isn't the paper cited in the NYT piece, but it uses a big dataset.

If you give your children money, for example, to buy a house, then they don't go into debt because interest payments are not flowing to financial institutions.

So, you maintain more inter-generational wealth.

Some of the subsidies given to 20-somethings are intended to boost their careers and not merely finance consumption.

My wife is a doctor, as are her siblings. They finished their medical training in another country without any debt, and she has informed me that our children should not take loans even for professional school. I've explained to her that in the U.S. people typically don't rely on their parents for law/business/medical school, but you try arguing with a Tiger Mother .

Yes, I know that some of the money being given to 20-somethings (the paper emphasized "mid-20s") goes to education. But I'm still not terribly impressed with the outcome of your tiger-momming if you're still signing checks for your 25-year-old. Nobody was giving me a dime at 25.

Intergenerational wealth transfer is how wealth is maintained across generations.

Uh huh. What's your point? I'll inherit money when my parents pass away, presuming they don't end up needing nursing home care that eats it all up. They didn't give me money when I was 25, though, because they expected me to be figuring out how to make it myself.

Currently, the amount of an estate above $5.25 million is subject to a 40% federal estate tax and possibly a state-level estate tax. Each parent can give $14,000 annually to a child without eating into the lifetime gift tax limit, and there is no limit on gifts used for education. So it makes sense for rich Tiger Parents to give their adult children $28K per year if those children are responsible.

What you see as a failure of Tiger Mothering may be in part intelligent estate planning. JonLaw understands this.

My point is that the intergenerational wealth transfer maintains advantages of the wealthier people.

You, personally, presumably aren't trying to build and maintain significant amounts of *family* wealth over generations, so it's not relevant to you.

Other families are doing this, which means that they are being provided with subsidies that will increase the durability and success of the *family* in the future.

It's an individualist vs. collectivist issue.

I'm familiar with the gift tax and the estate tax, thanks.

My spouse actually believes in the same model, for whatever that is worth.

I suspect that this is primarily because he is too out of touch to understand the quantities of money that we are now discussing there, but that's just me.

Neither of us paid for graduate school-- graduate school paid US; STEM fields are awesome that way, incidentally.