Strong evidence has been found of a causal relationship between household financial resources and children's outcomes.

The systematic review carried out for the Joseph Rowntree Foundation looked at research studies that focused on whether money is the cause of differences in children’s outcomes, in areas such as health and education. It considered whether money itself is the key factor, or whether it is other household differences such as parental education levels or attitudes toward parenting.

Key findings

• Children in lower-income families have worse cognitive, social-behavioural and health outcomes in part because they are poorer – not just because low income is correlated with other household and parental characteristics.
• The evidence is strongest for cognitive development and school achievement, followed by social-behavioural development. Income also affects outcomes indirectly affecting children, including maternal mental health, parenting and home environment.
• The impact of increases in income on cognitive development appears roughly comparable with that of spending similar amounts on school or early education programmes. Increasing household income could substantially reduce differences in schooling outcomes, while also improving wider aspects of children’s well-being.
• A given sum of money makes significantly more difference to children on low income than those in better-off households (while still helping better-off children).
• Longer-term poverty affects children’s outcomes more severely than short-term poverty.
• Although many studies were from the USA, the mechanisms through which money appears to affect children’s outcomes, including parental stress, anxiety and material deprivation, are equally relevant in the UK.

Source: Kerris Cooper and Kitty Stewart, Does Money Affect Children's Outcomes? A Systematic Review, Joseph Rowntree Foundation
Links: Report | Summary | JRF blog post