Unearned cash provides more than a financial boost

Unearned cash provides more than a financial boost
 
A new working paper from the National Bureau of Economic Research examines the effect of changes in unearned household income on children's personality traits and mental health, and concludes that increases in unearned money have a significant positive effect on children's social and emotional well-being.

The authors used data from The Great Smoky Mountains Study of Youth (GSMS), a longitudinal survey of 1,420 North Carolina children who were ages 9, 11, and 13 at the start of the study. Children and parents were interviewed separately each year until the child was 16. The young people were then also interviewed at 19 and 21. The GSMS was specifically created to assess mental health and well-being in children.

The initial survey contained 1,070 non-Indian children, and 350 American Indian children from the Eastern Band of Cherokee Indians, who were over sampled. The survey began in 1993, and after the fourth year, a casino opened on the Eastern Cherokee reservation. The casino is owned by the Eastern Cherokee tribal government, and a portion of the profits (approximately $4,000 per year) is distributed twice a year to all adult tribal members.

The authors found large beneficial effects of improved household finances on children's emotional and behavioral health and positive personality trait development, especially for children who were lagging behind their peers in these measures before the intervention.

They suggest this could be due to improved parental outlook, mental health, and happiness, and note that parental relationships with children and with their spouses/partners also improved. They also found that households that received the casino payments were more likely to move to slightly better areas (in terms of median household income), and suggest that at least some of the improvement in the child behavioral and personality traits could be explained by better community amenities in higher income areas.

Johns Hopkins University 

Research in Brief

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