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McNair Scholars Program

Lisa Valentine


Education: Bachelor of Science in family and consumer economics (May 2003)

McNair Project: Parent Asset Accumulation and the Effect on Children's Asset Accumulation (2002)

Mentor: Tracy Turner, Ph.D.

Parents' financial shrewdness may affect their children's wealth accumulation. Households where parents are knowledgeable and practice sound judgment in financial matters will tend to have children who are knowledgeable in financial matters. Households where parents are not knowledgeable of building financial wealth are likely to have children who are not knowledgeable of building wealth and, therefore, less likely to accumulate assets. This is important because if some households have low wealth, and if parent savings behavior helps to form the savings behavior of their offspring, then these low-wealth households will continue to have low wealth across generations. This project examines the extent to which parents influence their children's asset accumulation. We provide a careful review of existing research and conduct an empirical study. Our findings indicate that stock ownership is fundamental to building wealth, parent asset accumulation dramatically increases the likelihood that their children will accumulate assets as young adults, and education, both through the parent effect and through formal channels, plays a critical role in enabling young households to accumulate wealth. Since parent savings behavior has been proven to help form the savings behavior of their offspring, then low-wealth households must receive education or training regarding financial issues in order to construct a legacy of financial stability and wealth building for their children.