Wealthier families have happier kids

The income of parents has been shown to have momentous impact on their children's future income, educational attainment and physical health. New research shows that it can make them emotionally healthier too.

According to a study from Randall Akee at UCLA, Emilia Simeonova at Johns Hopkins, and E. Jane Costello and William Copeland from Duke University, an increase in household income leads to decreases in mental health and behavioral issues in children.

"Our study finds that exogenous changes in unearned household income have large effects on child personality traits and symptoms of emotional and behavioral distress as measured at age 16," wrote the researchers. "Furthermore, we find that the gains are largest for the children with the most (pre-intervention) negative personality traits and had the most behavioral and emotional problems."

In order to study these effects the researchers used a survey called the Great Smoky Mountains Study of Youth that followed kids starting in 1993 in 11 counties located in western North Carolina. Two of those counties are home to the federally recognized Cherokee reservation, and Native American children made up about a quarter of the survey.

In 1997, a casino opened on the Cherokee land, and each adult in the tribe began to receive a $4,000 a year payout from the casino operation. This increased the wealth of the Native American families dramatically, and closed the wealth gap between them and their non-Native American peers.

"The average income of AI households with two adult tribal members in the first four (pre-casino) survey waves was $22,145, so the casino transfers increased household income by almost 20% for these households," said the study.

In addition to income, the survey used parents' characterizations of their children and direct questions to the kids to evaluate 5 measures of mental health: behavioral disorders symptoms, emotional disorder symptoms, conscientiousness, agreeableness, and neuroticism.

After their data analysis before and after the casino credit began to be distributed, the researchers found that in the Native American population that received the money, behavioral disorder symptoms dropped by 26.7% of a standard deviation and emotional disorder symptoms dropped by 35.6%.

Additionally, conscientiousness and agreeableness increased by 42.8% and 30.6% respectively, while narcissism did not move a statistically significant amount.

These effects were also most pronounced in those children whose families were the poorest before the casino payments and who had worse mental health before the payments.

The researchers found 3 mechanisms that helped explain these improvements:

1. Parental Behaviors: There was a marked increase in parental supervision of the children, decrease in parental and marital stresses, and the child's self-reported enjoyment of their parent. "The overall take-away is that parents who receive the extra unearned income due to the casino transfers provide investments in their children who have lower than average personality traits and higher than average amounts of behavioral and emotional disorders," says the researchers.
2. Parental Drug and Alcohol Abuse and Own Mental Health Outcomes: The research shows that reported use of drugs and alcohol decreased, while the number of parents seeking mental health assistance increased.
3. Movements across Census Tracts: After receiving the payments, those that lived off the reservation were 7% more likely to move to a census tract with higher levels of educational attainment and higher median incomes. Those that live on the reservation, however, were less likely to move.

The researchers point out this is important not only for the children's health but also for their future in the world.

"Higher levels of behavioral and emotional disorders are associated with lower levels of educational attainment and employment probabilities," they wrote. "Conversely, higher levels of the three personality traits (conscientiousness, agreeableness and neuroticism) at age 16 are associated with higher levels of these same age 25 outcomes."

Money may not be able to buy happiness, but it seems it does make it easier to be happy.