Fabian T. Pfeffer

Wealth Disparities Before and After the Great Recession

The collapse of the labor, housing, and stock markets beginning in 2007 created unprecedented challenges for American families. This study examines disparities in wealth holdings leading up to the Great Recession and during the first years of the recovery. All socioeconomic groups experienced declines in wealth following the recession, with higher wealth families experiencing larger absolute declines. In percentage terms, however, the declines were greater for less advantaged groups as measured by minority status, education, and prerecession income and wealth, leading to a substantial rise in wealth inequality in just a few years. Despite large changes in wealth, longitudinal analyses demonstrate little change in mobility in the ranking of particular families in the wealth distribution. Between 2007 and 2011, one-fourth of American families lost at least 75 percent of their wealth, and more than half of all families lost at least 25 percent of their wealth. Multivariate longitudinal analyses document that these large relative losses were disproportionally concentrated among lower-income, less educated, and minority households.

Beyond Access: Explaining Socioeconomic Differences in College Transfer

Reducing socioeconomic differences in college transfer requires understanding how and why parental education, occupational class, and family income are associated with changing colleges. Building on prior studies of traditional community college transfer, the authors explore relationships between those factors and two types of transfer among four-year college students. The results indicate that reverse transfer—the move from a four-year to a community college—is more common among students from less-educated families partly because of lower levels of academic performance during their freshman year. In contrast, students from advantaged backgrounds in terms of class and income are more likely than are others to engage in a lateral transfer—from a four-year to a four-year college—which may reflect individual preferences for changing colleges, rather than a reaction to poor academic performance. Implications for policy and practice are discussed in light of the fact that only reverse transfer is associated with lower rates of completion of bachelors degrees.

What is a representative brain? Neuroscience meets population science

The last decades of neuroscience research have produced immense progress in the methods available to understand brain structure and function. Social, cognitive, clinical, affective, economic, communication, and developmental neurosciences have begun to map the relationships between neuro-psychological processes and behavioral outcomes, yielding a new understanding of human behavior and promising interventions. However, a limitation of this fast moving research is that most findings are based on small samples of convenience. Furthermore, our understanding of individual differences may be distorted by unrepresentative samples, undermining findings regarding brain–behavior mechanisms. These limitations are issues that social demographers, epidemiologists, and other population scientists have tackled, with solutions that can be applied to neuroscience. By contrast, nearly all social science disciplines, including social demography, sociology, political science, economics, communication science, and psychology, make assumptions about processes that involve the brain, but have incorporated neural measures to differing, and often limited, degrees; many still treat the brain as a black box. In this article, we describe and promote a perspective—population neuroscience—that leverages interdisciplinary expertise to (i) emphasize the importance of sampling to more clearly define the relevant populations and sampling strategies needed when using neuroscience methods to address such questions; and (ii) deepen understanding of mechanisms within population science by providing insight regarding underlying neural mechanisms. Doing so will increase our confidence in the generalizability of the findings. We provide examples to illustrate the population neuroscience approach for specific types of research questions and discuss the potential for theoretical and applied advances from this approach across areas.

Wealth Inequality and Accumulation

Research on wealth inequality and accumulation and the data upon which it relies have expanded substantially in the twenty-first century. While the field has experienced rapid growth, conceptual and methodological challenges remain. We begin by discussing two major unresolved methodological concerns facing wealth research: how to address challenges to causal inference posed by wealths cumulative nature and how to operationalize net worth, given its highly skewed nature. To underscore the need for continued empirical attention to net worth, we review trends in wealth levels and inequality and evaluate wealths distinctiveness as an indicator of social stratification. Next, we provide an overview of data sources available for wealth research. We then review recent empirical evidence on the effects of wealth on other social outcomes, as well as research on the determinants of wealth. We close with a list of promising avenues for future research on wealth, its causes, and its consequences.

Measuring wealth and wealth inequality: Comparing two U.S. surveys

Household wealth and its distribution are topics of broad public debate and increasing scholarly interest. We compare the relative strength of two of the main data sources used in research on the wealth holdings of U.S. households, the Survey of Consumer Finances (SCF) and the Panel Study of Income Dynamics (PSID), by providing a description and explanation of differences in the level and distribution of wealth captured in these two surveys. We identify the factors that account for differences in average net worth but also show that estimates of net worth are similar throughout most of the distribution. Median net worth in the SCF is 6% higher than in the PSID and the largest differences between the two surveys are concentrated in the 1-2 percent wealthiest households, leading to a different view of wealth concentration at the very top but similar results for wealth inequality across most of the distribution.

Grand Advantage: Family Wealth and Grandchildren’s Educational Achievement in Sweden

We study the role of family wealth for children’s educational achievement using novel Swedish register data. In particular, we focus on the relationship between grandparents’ wealth and their grandchildren’s educational achievement. Doing so allows us to reliably establish the independent role of wealth in contributing to long-term inequalities in opportunity. We use regression models with extensive controls to account for observed socioeconomic characteristics of families, cousin fixed effects to net out potentially unobserved grandparent effects, and marginal structural models to account for endogenous selection. We find substantial associations between grandparents’ wealth and their grandchildren’s grade point averages (GPA) in the 9th grade that are only partly mediated by parents’ socioeconomic characteristics and wealth. Our findings indicate that family wealth inequality—even in a comparatively egalitarian context like Sweden—has profound consequences for the distribution of opportunity across multiple generations. We posit that our estimates of the long-term consequences of wealth inequality may be conservative for nations other than Sweden, like the United States, where family wealth—in addition to its insurance and normative functions—allows the direct purchase of educational quality and access.

Mobility Regimes and Parental Wealth: The United States, Germany, and Sweden in Comparison

We study the role of parental wealth for childrens educational and occupational outcomes across three types of welfare states and outline a theoretical model that assumes parental wealth to impact offsprings attainment through two mechanisms, wealths purchasing function and its insurance function. We argue that welfare states can limit the purchasing function of wealth, for instance by providing free education and generous social benefits, yet none of the welfare states examined here provides a functional equivalent to the insurance against adverse outcomes afforded by parental wealth. Our empirical evidence of substantial associations between parental wealth and childrens educational success and social mobility in three nations that are marked by large institutional differences is in line with this interpretation and helps us re-examine and extend existing typologies of mobility regimes.

Equality and quality in education. A comparative study of 19 countries

This contribution assesses the performance of national education systems along two important dimensions: The degree to which they help individuals develop capabilities necessary for their successful social integration (educational quality) and the degree to which they confer equal opportunities for social advancement (educational equality). It advances a new conceptualization to measure quality and equality in education and then uses it to study the relationship between institutional differentiation and these outcomes. It relies on data on final educational credentials and literacy among adults that circumvent some of the under-appreciated conceptual challenges entailed in the widespread analysis of international student assessment data. The analyses reveal a positive relationship between educational quality and equality and show that education systems with a lower degree of institutional differentiation not only provide more educational equality but are also marked by higher levels of educational quality. While the latter association is partly driven by other institutional and macro-structural factors, I demonstrate that the higher levels of educational equality in less differentiated education systems do not entail an often-assumed trade-off for lower quality.

Growing Wealth Gaps in Education

Prior research on trends in educational inequality has focused chiefly on changing gaps in educational attainment by family income or parental occupation. In contrast, this contribution provides the first assessment of trends in educational attainment by family wealth and suggests that we should be at least as concerned about growing wealth gaps in education. Despite overall growth in educational attainment and some signs of decreasing wealth gaps in high school attainment and college access, I find a large and rapidly increasing wealth gap in college attainment between cohorts born in the 1970s and 1980s, respectively. This growing wealth gap in higher educational attainment co-occurred with a rise in inequality in children’s wealth backgrounds, although the analyses also suggest that the latter does not fully account for the former. Nevertheless, the results reported here raise concerns about the distribution of educational opportunity among today’s children who grow up in a context of particularly extreme wealth inequality.