The American Family: Fewer Siblings Means Greater Wealth

Physician's Money Digest, September30 2003, Volume 10, Issue 18

Love them or hate them, siblings have a great effect on our lives. Findings from a recent Ohio State University (OSU) study show that family size even determines your future wealth.

Demography

Children from larger families accumulate less wealth in adulthood than do those from smaller families, reports OSU sociologist Lisa Keister, PhD. The study, published in the August 2003 issue of (www.prb.org/cpipr/articlesdemography.html), looked at a sample of 10,000 adults in their late 30s and early 40s.

It found that on average, individuals from "only child" families were the wealthiest in adulthood—and wealth declined steadily with each additional child in the family.

All Those Kids?

Dr. Keister found that median net worth (assets minus debts) averaged $62,000 for only children and declined steeply after that. Average net worth findings based on the number of children in a family were as follows:

As evidenced above, growing up in a family of 4 or more children especially seemed to put a person at a greater economic disadvantage, Dr. Keister noted.

According to the study, individuals from larger families were less likely to own either a home or stocks as adults, and also less likely to receive a trust fund or an inheritance. Why is this? The logic is simple: The more slices you cut a pie into, the less everyone receives. "Siblings dilute the finite amount of money and time parents can devote to each child," Dr. Keister explains. "Having fewer resources limits educational attainment, and reduces financial transfers from parents to children, such as help with tuition, a down payment on a house, or inheritances."

She adds, "Inherited wealth, even a small amount of it, can open doors to education and higher-paying jobs, reduce the need to acquire debt (eg, school loans), and lead to investment and greater accumulated wealth in adulthood."

What to Do

Are there ways to beat the odds? Yes and no. "Having wealthy parents, earning a college degree, and buying stock all increased an individual's chances of being wealthier than average in adulthood," Dr. Keister says. She found that people with college or professional degrees (eg, physicians) do tend to accumulate more overall wealth. However, she asserts, "Even those with advanced degrees accumulate considerably less total wealth if they are from larger, rather than smaller, families. Those from smaller families still had more of an advantage."

For people with college degrees, statistics show the average net worth, based on family size, jumps to the following:

So the next time you're unhappy about finances, just blame your brothers and sisters. It adds a whole new element to sibling rivalry.