Parental income is one of several factors involved in socioeconomic status, along with the parents' marital status, education, parental occupations and the neighborhood in which the family lives. All of these variables combine to affect children’s academic achievements, emotional and social development and ultimate success or lack of success in life.
Children of parents who are poor are more likely to have behavior problems at school and home, according to an article in the Winter 2010 issue of “Focus,” They do not do as well in cognitive testing in early childhood as children from more affluent families. These children are more likely to drop out of high school, or if they do finish high school, less likely to go to college. If they enter college, they are less likely to graduate. In addition, poor children are more likely to have children themselves at a young age and more likely to be poor as adults.
2. Just a Little Helps
A January 2010 article in the “American Economic Journal: Applied Economics” found that an additional $4,000 a year in income had beneficial effects for low-income Cherokee Indian children. The researchers studied Indian and non-Indian families who had an average annual income of $8,000; when a casino opened on the reservation, each Indian family was allotted an additional $4,000 a year. In those families, children were more likely to have completed an additional year of school by age 21 and less likely to have engaged in criminal activity. Although the researchers studied Indian children, they note that the additional income allowed parents to improve their relationships with their children, findings which could be applied outside of the population studied.
3. Scholastic Achievement
A study reported in the September 2011 issue of “Developmental Psychology” found that even a relatively small increase in family income had an impact on children’s scholastic achievement. Families in the study received additional income from a variety of sources in amounts ranging from $800 to $2,200. Children ranging from age 3 to 5 in the families were tested for their ability to count and to recognize shapes, colors and letters. Those children whose families received at least $1,000 of extra income scored an increase equivalent to between 1 and 8 IQ points, as well as increasing the numbers of correct answers on their tests.
4. Stress, Learning and High Dropout Rates
Low socioeconomic status tends to go hand-in-hand with lower education, poverty and poor health, according to the American Psychological Association. Children from low SES families are likely to learn more slowly, to live in a low literacy environment and to be subjected to chronic stress -- all of which affect children’s scholastic achievements. These children are more likely to drop out of school; the dropout rate was almost 17 percent in low SES families compared to a dropout rate of just over 3 percent for high-income families. When the school in the neighborhood is of high quality, however, low SES has less of an effect on children’s learning.
5. Other Issues
In addition to scholastic performance, the APA notes that low SES affects other aspects of a child’s life. Children from low SES families are more likely to have learning disorders, attention problems, disinterest and display a lack of cooperation in school. These children were also more likely to report emotional distress and depression. Children from low SES families were more likely to engage in risky behaviors such as smoking and heavy drinking, attempt suicide, show symptoms of ADHD and have higher levels of aggression. They were also more likely to develop Alzheimer’s disease later in life.
- Institute for Research on Poverty: Revisiting an Old Question - How Much Does Parental Income Affect Child Outcomes?
- American Economic Journal Applied Economics: Parents’ Incomes and Children's Outcomes - A Quasi-Experiment
- Developmental Psychology: Does Money Really Matter? Estimating Impacts of Family Income on Young Children's Achievement with Data from Random-Assignment Experiments
- American Psychological Association: Education & Socioeconomic Status
- American Psychological Association: Children, Youth and Families & Socioeconomic Status
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