On Intergenerational Immobility : Evidence that Adult Credit Health Reflects the Childhood Environment

Goodman, Sarena; Mezza, Alvaro; Volz, Alice Henriques

doi:10.17016/FEDS.2017.032r1

Working Paper

On Intergenerational Immobility : Evidence that Adult Credit Health Reflects the Childhood Environment

Abstract: Using a novel dataset that links socioeconomic background to future credit, postsecondary education, and federal student loan and grant records, we document that, even though it is not and cannot be used by credit agencies in assigning risk, background is a strong predictor of adult credit health. A relationship remains upon inclusion of achievement, attainment, and debt management metrics. These findings reveal a new dimension along which childhood circumstances persist into adulthood and imply that the many important contexts in which credit scores are relied upon to evaluate individuals (e.g., lending, insurance, employment) may be helping to preserve inherited inequities.

Keywords: Credit Health; Credit Scores; Intergenerational Mobility; Socioeconomic Status; Student Loans;

JEL Classification: D12; D14; I22; I32; J10; J62;

https://doi.org/10.17016/FEDS.2017.032r1