Parental Background and Child Outcomes: How Much Does Money Matter, and What Else Matters?

Parental Background and Child Outcomes: How Much Does Money Matter, and What Else Matters?
Laura Blow et al, Institute for Fiscal Studies

This controversial study by researchers  at the Institute for Fiscal Studies and the University of Warwick suggests that giving parents more money does not necessarily improve outcomes for their children.

After looking at existing research – much of it from the US – and bringing together the findings of seven new research projects, the researchers conclude that the picture is mixed.

Long-term income levels have much more impact than current income levels on outcomes for children and young people. The chances of a child smoking, for example, don’t fall when parental income rises, even though children in low income families are more likely to smoke than those in higher income households. This seems to be explained largely by factors such as parents’ own smoking behaviour and their level of education than by the money available in the household at a particular time.

The study also finds that a temporary loss of parental income does not impinge on children. Parents do not spend less on their children if they experience an unexpected loss in child benefit or income, choosing instead to spend less on themselves.

Lone parents’ income has risen over time and this has been associated with a decrease in material deprivation which itself impacts on children’s health. But the researchers argue that this is because lone parent families have experienced increases in their long-term income levels, rather than in their current income at any particular time.

Teenagers’ decisions about whether to leave school at 16 or stay on are known to be strongly associated with parental education and income. One of the new studies finds that current income also matters, but not as much as the long-term picture.