Mayer, however, finds that little of the increase in college graduation is attributable to the rise in the returns to schooling. Therefore, she turns to the question of why inequality has these effects. She considers several theories about how economic inequality could affect children's educational attainment. To avoid state differences that might affect education, she compares children who live in the same state. Mayer finds that a child's own family income does not account for the effect of inequality on their schooling.
Inequality affects children's behavior in ways that are independent of their household income.
The effect of inequality, rather, is due to the effect of other people's income. When the rich get richer, they benefit from positive interpersonal comparisons. However, as the poor get poorer, they suffer from more negative interpersonal comparisons. These comparisons affect their educational attainment. Because economic inequality seems to have some benefits, at least for affluent children, it is a challenge to policymakers to try to reduce the potentially harmful effects of inequality on low-income children without eliminating the potentially beneficial effects for higher income families.