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Long-term economic costs of psychological problems during childhood

Listed author(s):
  • Smith, James Patrick
  • Smith, Gillian C.

Childhood psychological conditions including depression and substance abuse are a growing concern among American children, but their long-term economic costs are unknown. This paper uses unique data from the US Panel Study of Income Dynamics (PSID) following groups of siblings and their parents for up to 40 years prospectively collecting information on education, income, work, and marriage. Following siblings offers an opportunity to control for unobserved family and neighborhood effects. A retrospective child health history designed by the author was placed into the 2007 PSID wave measuring whether respondents had any of 14 childhood physical illnesses or suffered from depression, substance abuse, or other psychological conditions. Large effects are found on the ability of affected children to work and earn as adults. Educational accomplishments are diminished, and adult family incomes are reduced by 20% or $10,400 per year with $18,000 less family household assets. Lost income is partly a consequence of seven fewer weeks worked per year. There is also an 11% point lower probability of being married. Controlling for physical childhood diseases shows that these effects are not due to the co-existence of psychological and physical diseases, and estimates controlling for within-sibling differences demonstrate that these effects are not due to unobserved common family differences. The long-term economic damages of childhood psychological problems are large--a lifetime cost in lost family income of approximately $300,000, and total lifetime economic cost for all those affected of 2.1 trillion dollars.

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File URL: http://www.sciencedirect.com/science/article/pii/S0277-9536(10)00268-6
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Article provided by Elsevier in its journal Social Science & Medicine.

Volume (Year): 71 (2010)
Issue (Month): 1 (July)
Pages: 110-115

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Handle: RePEc:eee:socmed:v:71:y:2010:i:1:p:110-115
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  1. Anne Case & Darren Lubotsky & Christina Paxson, 2001. "Economic Status and Health in Childhood: The Origins of the Gradient," NBER Working Papers 8344, National Bureau of Economic Research, Inc.
  2. John Fitzgerald & Peter Gottschalk & Robert Moffitt, 1998. "An Analysis of Sample Attrition in Panel Data: The Michigan Panel Study of Income Dynamics," NBER Technical Working Papers 0220, National Bureau of Economic Research, Inc.
  3. Frederick J. Zimmerman & Wayne Katon, 2005. "Socioeconomic status, depression disparities, and financial strain: what lies behind the income-depression relationship?," Health Economics, John Wiley & Sons, Ltd., vol. 14(12), pages 1197-1215.
  4. Gary S. Becker & Nigel Tomes, 1976. "Child Endowments, and the Quantity and Quality of Children," NBER Working Papers 0123, National Bureau of Economic Research, Inc.
  5. Lee A. Lillard & Constantijn W. A. Panis, 1998. "Panel Attrition from the Panel Study of Income Dynamics: Household Income, Marital Status, and Mortality," Journal of Human Resources, University of Wisconsin Press, vol. 33(2), pages 437-457.
  6. Anne Case & Angela Fertig & Christina Paxson, 2004. "The Lasting Impact of Childhood Health and Circumstance," Working Papers 246, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
  7. Becketti, Sean, et al, 1988. "The Panel Study of Income Dynamics after Fourteen Years: An Evaluatio n," Journal of Labor Economics, University of Chicago Press, vol. 6(4), pages 472-492, October.
  8. Vivian H. Hamilton & Philip Merrigan & Éric Dufresne, 1997. "Down and out: estimating the relationship between mental health and unemployment," Health Economics, John Wiley & Sons, Ltd., vol. 6(4), pages 397-406.
  9. James Smith, 2009. "Reconstructing childhood health histories," Demography, Springer;Population Association of America (PAA), vol. 46(2), pages 387-403, May.
  10. repec:pri:cheawb:case_paxson_economic_status_paper is not listed on IDEAS
  11. Juster, F. Thomas & Smith, James P. & Stafford, Frank, 1999. "The measurement and structure of household wealth," Labour Economics, Elsevier, vol. 6(2), pages 253-275, June.
  12. repec:pri:cheawb:case_paxson_economic_status_paper.pdf is not listed on IDEAS
  13. Janet Currie & Mark Stabile, 2003. "Socioeconomic Status and Child Health: Why Is the Relationship Stronger for Older Children?," American Economic Review, American Economic Association, vol. 93(5), pages 1813-1823, December.
  14. Linda Waite, 1995. "Does marriage matter?," Demography, Springer;Population Association of America (PAA), vol. 32(4), pages 483-507, November.
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