Using Identity Based Motivation Theory to Explain Indirect Effects of Assets On Young Adults College Outcomes

Background and Purpose: A compelling aspect of children‘s savings programs is their potential for changing how children think and act in regards to school. However, theory and research on the psychological effects of assets are in their early stages of development. One promising area of theoretical and research inquiry is the study of college expectations as an explanatory mechanism for the relationship between assets and children‘s educational outcomes. However, little theory has been developed about how assets may influence college expectations.

Identity-Based Motivation (IBM) theory is one promising area of inquiry. IBM focuses on visions children have of themselves in a future state (i.e., a possible self or in this case, college bound identity). We build on IBM by suggesting institutions (1) provide contextual cues that bring college-bound identity to the forefront of the mind; (2) provide embedded thought processes or strategies for overcoming difficulty; and (3) provide power over resources.

Institutions within the applied social science context are a type of intervention designed to alter behaviors and outcomes of individuals. Savings programs are a type of intervention designed to change savings behavior and outcomes of children. Therefore, we suggest they should provide children with important contextual cues, embedded thought process or strategies, as well as power over resources.

Methods: This study uses longitudinal data from the Panel Study of Income Dynamics (PSID) and its supplements, the Child Development Supplement (CDS) and the Transition into Adulthood (TA) Supplement. Our final weighted “full” sample had 1,003 children.

Using the family income variable, we created a dichotomous variable with the following categories: low- to modest-income (LMI) (< $50,000), and high-income ($50,000 or more). This variable is used to create a sample of LMI children and their parents. Our final weighted LMI sample had 544 children.

Path analysis was used to assess the interplay between parents‘ expectations, children‘s expectations, parents‘ and children‘s school savings. Bootstrapping was used to directly test indirect effects. Missing data were handled by expectation-maximization imputation.

Results: Children‘s school savings is a positive predictor of children‘s college progress, children‘s and parents‘ school savings are positive predictors of children‘s expectations and children‘s expectations are a strong predictor of children‘s college progress. In regards to group congruence, we find that parents‘ expectations are a strong predictor of children‘s college progress in-and-of-themselves. Parents‘ expectations are also a strong predictor of children‘s expectations.

Conclusions and Implications: An implication for research is that the IBM framework provides researchers with a helpful way to explain indirect effects of assets. An implication for policy is that children’s savings programs may help make the college-bound identity salient for low- and moderate-income children. Another implication for policy is, if children’s savings programs are designed to also encourage parent savings, they may help the college-bound identity feel more congruent with children’s group identity.