The Long-Term Economic Benefits of Natural Mentoring Relationships for Youth

Abstract

Natural mentors have been shown to help improve psychological and educational outcomes of youth, and may serve an important role for youth experiencing risk in the home. Using data from the National Longitudinal Study of Adolescent to Adult Health (Add Health), we investigated the associations between natural mentors during youth and income during early adulthood, including how these relations were moderated by the absence of a father figure and race. We also estimated the lifetime economic benefits to having a natural mentor. The presence of a natural mentor alone did not have a significant impact on annual earnings during adulthood. However, youth without a father but who had a male mentor earned significantly more, on average, than those without a male mentor. These effects were more pronounced in a subsample of African American youth. The net present value of total lifetime benefits to having a male natural mentor was approximately $190,000 for all fatherless youth and $458,000 for African American fatherless youth. These results suggest that natural mentors play a crucial role in economic outcomes for youth, which may vary by sociodemographic factors.

Appendix

Consider the AA subsample’s absent father/male mentoring coefficient of .70 from column 4 of Table 3, which implies a 101 % increase in income at the average age of 29. Average predicted income of respondents included in the AA subsample was $19,000. Therefore, on average, a fatherless youth who had a male mentor at or after turning age 14 saw an increase of 101 % in annual income, or an increase of approximately $19,200. To compute the present value, at age 29, of this stream of revenues for another 25 years, we follow Chetty et al. (2011) in using a discount rate of 3 %:

$$FV = \frac{19,200}{.03} \times \left[ {1 - \left( {\frac{1}{{\left( {1 + .03} \right)^{25} }}} \right)} \right] = \$ 334,000$$

This is the present value of the future increase in income of a mentored 29-year-old who works for another 25 years. But this value must be discounted back because the increase in income occurred after the mentoring took place, and the focus of this study is to estimate the value of mentors today on youth. Discounting future values allows for comparison of one potential investment (in this case, a mentor) versus another (for example, investing in the stock market). The value is discounted back to when the respondent was age 14 because, according to the survey, this was the earliest in the life of the respondent that the mentor could have been important in his or her life, and discounting benefits to a younger age results in more conservative estimates due to a larger denominator. To discount the value back to when the respondent was age 14, we use Eq. (3):

$$\begin{aligned} PV = & \frac{FV}{{\left( {1 + i} \right)^{n} }} \\ = & \frac{\$ 334,000}{{\left( {1 + .03} \right)^{15} }} \\ = & \$ 215,000 \\ \end{aligned}$$

where the numeric value 15 comes from the average respondent age (29) less the age when the mentoring relationship may have started (14).