Skip to main content
The Science of Personal Finance

Childhood Mental Problems Affect Adult Earnings

Psychological problems as a child can significantly reduce the amount of money one will earn in adulthood, according to a new analysis.

The RAND Corp. study, led by senior economist James Smith and focused on the British, found that family income was about one-fourth lower among those who experienced psychological issues during childhood – including depression, anxiety or attention deficit disorder – than among those who did not.

The study confirmed research done by Smith last year on Americans, which concluded that childhood depression affects earnings and makes people less likely to marry.

In the new study, researchers analyzed information collected as part of the National Child Development Study, which followed the lives of 17,634 children born in Britain during the first week of March 1958.

Mental vs. phsyical

While it previously was thought that physical health problems would play a larger role in determining one's life course, Smith said that proved not to be the case. [In U.S., 1 in 5 Teens Has Serious Mental Disorder]

"By far the biggest impact is mental health," Smith told LiveScience. "It really wasn't even close."

The study concluded that a 50-year-old person's family income is reduced by at least 25 percent following childhood mental problems, as opposed to a 9 percent reduction following major childhood physical health problems and only a 3 percent reduction following minor childhood physical health problems.

In addition, childhood psychological issues were associated later in life with being less conscientious, having a lower likelihood of marriage and having less-stable personal relationships overall.

While acknowledging physical health issues can be difficult to handle, "it isn't the same thing as feeling depressed every day," Smith said. "The mental health issues are more challenging."

He noted the large impact seen in the study can be attributed to the fact that psychological issues can manifest themselves much earlier in life and persist.

Smith said the conclusions reached in this study can easily be applied to American children as well. The U.S. study he completed last year showed that childhood psychological problems had a major impact on adult socioeconomic standing, costing $2.1 trillion over the lifetimes of all affected Americans.

Coping strategies

New Hampshire psychologist Dawn Huebner recommended that parents teach children proper coping skills at an early age.

Instead of avoiding issues that arise, "it is much more helpful to teach children how to move through situations that are difficult to them," she said.

Huebner, the author of "What to Do When You Worry Too Much," encourages parents to always be talking to their children about their feelings and providing them with the skills necessary to solve their own problems.

"Instead of just telling them what to do," she said, "it is important to teach kids how tointernalize a set of strategies."

It's also important for parents to be cognizant of a child's potential mental health problems, Huebner said. The longer the problem goes untreated, the more difficult it is to correct.

"They begin to build a lifestyle around it," she said of kids suffering from psychological problems.  "It becomes more entrenched in their life."

She added parents should not be afraid or embarrassed to seek professional help for their children when it is needed.

"When a child starts having difficulties that are interfering with their life, then it is time to seek some help," she said.

The new research, which also was conducted by Alissa Goodman and Robert Joyce of the Institute for Fiscal Studies in London, will be published in the upcoming Proceedings of the National Academies of Sciences journal and was supported by a grant from the U.S. National Institute on Aging. It was conducted through the RAND Labor and Population program, which examines issues involving U.S. labor markets, the demographics of families and children, social welfare policy, the social and economic functioning of the elderly, and economic and social change in developing countries.

This $ci-Fi article is part of an ongoing LiveScience series that explores the science of personal finance to help you navigate everyday life.