Did Home-Owning Millennials All Get Help from Their Parents?

Occasionally, I see an article in the press that is just so ridiculously misleading in how it treats statistics that I think: “Wow, what a teachable moment.” This is one such moment.

The Atlantic recently ran an article entitled, “Millennials Who Are Thriving Financially Have One Thing in Common…Rich Parents.” What a showstopper, huh? If you’re a Millennial, as I am by most definitions, the phrasing alone just drives you to click and comment, right? If you have a home, you want to say, “But I did this without any rich parents!” If you don’t have a home, you want to say, “This is my parents’ fault!” And if you’re not a Millennial, you want to say, “Stop blaming your parents and get off my lawn!” No one wins, except perhaps the Atlantic, since they get all sorts of ad revenue off of our outrage and perhaps a few extra readers due to social shares caused by that outrage.

All of this would be acceptable, if a bit annoying, if the Atlantic were presenting its statistics in a clear, forthright manner – that is, if the thing that financially thriving Millennials had in common was, indeed, rich parents. Unfortunately, like most news outlets these days, there’s a lot of cherry-picking going on in this article to present a particular point of view. For your convenience, I’ve extracted the three key statistics reported in that article that inform this view and pasted them here, so that you don’t need to wade through all the filler to find them yourself. Importantly, these were themselves borrowed from a Zillow.com analysis of Federal data.

1. “of the 46 percent of Millennials who pursued post-secondary education (that’s everything from associates degrees to doctorates), about 61 percent received some financial help with their educational expenses from their parents.”
2. “43 percent of Millennials who got help from their parents in paying for school were also able to become homeowners”
3. “These are the select few whose families had enough money to not only help them with college, but to then also assist them with a down payment on a home. This group accounts for more than half of the Millennial homeowners in the Zillow’s data, though they account for only 3 percent of the total Millennial population.”

So, let’s treat this like a word problem. What percentage of Millennials are we talking about here?

First, notice that we’re talking only about “Millennials who pursued post-secondary education.” 61% of 46% – which is 28% – of all Millennials received some financial help from their parents to afford such an education. That also means 100% – 61% = 39% of those purusing post-secondary education received no support. And let’s also remember that “some help with educational expenses” could mean “my parents paid for my books one semester.”

Second, notice that 43% of those people became homeowners. Not 43% received help from their parents – 43% became homeowners.  That means 43% of 28%: so 12% of all Millennials are homeowners who received support from their parents for education.  But that includes neither homeowners who didn’t pursue post-secondary education nor those who did but didn’t get any help. The number of homeowning Millennials in general is closer to 36%, meaning 36% – 12% = 24% of Millennials are homeowners without educational help (by definition, the non-rich-parent group) plus those who didn’t pursue post-secondary education.

Third, finally turning to our “thriving” group, “more than half” (such precision!) of Millennial homeowners had parents that helped them with both college and a down payment, which accounts for 3% of all Millennials.  Those are some interesting numbers to choose, since none of them speak to the thesis of this piece – that “thriving” Millennials, in general, all have rich parents in common. In the narrative of the article, “rich parents” is essentially synonymous with “gave money for both college and a house,” whereas “thriving” is essentially synonymous with “homeowner.” If you’ve been following along, you’ll notice we actually have the numbers to solve our word problem.  If 36% of all Millennials are homeowners and 3% of all Millennials we consider homeowners with rich parents, what percentage of homeowning Millennials have rich parents?  3% / 36% = 8%.

I’d say it’s pretty hard for members of a group to all have something “in common” when only 8% of them share it. This article, like so many before it, throws out a deluge of percentages with the hope that you won’t take a moment to think: does this actually make any sense or is someone trying to give a statistical impression rather than statistical truth?

So what’s the real conclusion here? People with parents willing to fund higher education and home payments are more likely to get higher education and buy a home, but plenty of people without rich parents still manage to do the same thing. It is just a bit harder. SURPRISE.

Unfortunately, this article is also just the most recent example in what I’m beginning to think of as a vast media victimization of Millennials – we poor, poor souls, lost in a deluge of horrible economic conditions from which we cannot escape. I can’t even decide if this is the better or worse than the “Millennials are the root of all evil in the world” articles. Economic suckitude certainly has done its damage – but it has done that damage to everyone. Why pretend otherwise?

To their credit, Zillow.com focused upon the 3%, and never made any claims about “one thing in common.” The most likely reason: unlike the Atlantic‘s report, Zillow.com’s report was written by an economist.  It also contains this telling footnote: “The sample size associated with these five conditions – age, education, financing of education, current housing tenure and source of funding for a down payment – is small and should be interpreted with caution.”  Indeed it should!