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Dates: 2007-2009
Funding: Medical Research Council
Collaborators: National Perinatal Epidemiology Unit (NPEU), Oxford
Information: Mara Violato and Stavros Petrou

Recent empirical literature, mainly North American, indicates that children born into poorer families are at greater risk of poorer cognitive, behavioural and health outcomes than their wealthier peers. These poor outcomes may also adversely affect those children’s future educational achievements and labour market engagement. The precise nature and strength of the relationship between family income and a broad range of poor health outcomes in childhood is still an ongoing debate among academic investigators and policy-makers alike. If family income has a statistically significant, causal and large-in-size impact on child outcomes, then direct cash transfers to disadvantaged families with children could play a substantial role in improving the development of children living in deprivation. Conversely, if the income impact is small in magnitude or not statistically significant, then other service-oriented strategies may well be more cost-effective than income redistribution policies in improving child outcomes.

This study investigates the extent to which family income is associated with an extensive range of child cognitive and behavioural outcomes (child development and temperament at 9 months; Total Difficulty Score – a measure of child behaviour – at age 3 and 5 years; Bracken School Readiness at age 4; British Ability Scale Naming Vocabulary at age 3 and 5 years; British  Ability Scale Picture Similarity at age 5 years) in a cohort of almost 19,000 British children born between 2000 and 2001, the Millennium Cohort Study. Merging the economists’ and developmental psychologists’ approaches, it also attempts to identify the main mechanisms through which family economic resources translate into better developmental outcomes for children. The relative and joint relevance of three groups of mediating factors (parental stress, parental investment and other family-related pathways), identified from the recent economic and psychological literature, are examined both in a cross-sectional (‘mopping-up’ approach) and panel data (fixed effects models) context.

Results indicate a weak or absent direct effect of family economic resources on child development after controlling for potential mediating mechanisms. The study also identifies key mediating factors (e.g. maternal depression, a cognitively stimulating home environment, parenting practices and length of breastfeeding) that could be targeted by government initiatives in order to effectively improve children’s intellectual development and behaviour beyond what income redistribution can achieve.


Violato, M, Petrou, S, Gray, R, and Redshaw, M (2011). Family income and child cognitive and behavioural development in the United Kingdom: does money matter?Health Econ, 20(10):1201-25.


iHEA 7th World Congress on Health Economics, Beijing. July 2009
Mara Violato 'Family income and child cognitive and behavioural development in the United Kingdom: does money matter?'