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Long-term economic costs of psychological problems during childhood

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  • Smith, James Patrick
  • Smith, Gillian C.

Abstract

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.

Suggested Citation

  • Smith, James Patrick & Smith, Gillian C., 2010. "Long-term economic costs of psychological problems during childhood," Social Science & Medicine, Elsevier, vol. 71(1), pages 110-115, July.
  • Handle: RePEc:eee:socmed:v:71:y:2010:i:1:p:110-115
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    References listed on IDEAS

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    Cited by:

    1. Cornaglia, Francesca & Crivellaro, Elena & McNally, Sandra, 2015. "Mental health and education decisions," Labour Economics, Elsevier, vol. 33(C), pages 1-12.
    2. Fitzsimons, Emla & Goodman, Alissa & Kelly, Elaine & Smith, James P., 2017. "Poverty dynamics and parental mental health: Determinants of childhood mental health in the UK," Social Science & Medicine, Elsevier, pages 43-51.
    3. John Roy & Stefanie Schurer, 2013. "Getting Stuck In The Blues: Persistence Of Mental Health Problems In Australia," Health Economics, John Wiley & Sons, Ltd., vol. 22(9), pages 1139-1157, September.
    4. Matti Sarvimäki & Laura Ansala & Ulla Hämäläinen, 2016. "Slipping through the Cracks of a Welfare State: Children of Immigrants in Finland," Working Papers 72, Government Institute for Economic Research Finland (VATT).
    5. Egan, Mark & Daly, Michael & Delaney, Liam, 2015. "Childhood psychological distress and youth unemployment: Evidence from two British cohort studies," Social Science & Medicine, Elsevier, pages 11-17.
    6. Johnston, David W. & Schurer, Stefanie & Shields, Michael A., 2011. "Evidence on the Long Shadow of Poor Mental Health across Three Generations," IZA Discussion Papers 6014, Institute for the Study of Labor (IZA).
    7. Egan, Mark & Daly, Michael & Delaney, Liam, 2016. "Adolescent psychological distress, unemployment, and the Great Recession: Evidence from the National Longitudinal Study of Youth 1997," Social Science & Medicine, Elsevier, pages 98-105.
    8. James P. Smith & Yan Shen & John Strauss & Yang Zhe & Yaohui Zhao, 2012. "The Effects of Childhood Health on Adult Health and SES in China," Economic Development and Cultural Change, University of Chicago Press, vol. 61(1), pages 127-156.
    9. repec:pri:crcwel:wp12-18-ff is not listed on IDEAS
    10. Lundborg, Petter & Nilsson, Anton & Rooth, Dan-Olof, 2014. "Adolescent health and adult labor market outcomes," Journal of Health Economics, Elsevier, vol. 37(C), pages 25-40.
    11. Sarah Gibney & Mark E. McGovern & Erika Sabbath, 2013. "Social Relationships in Later Life: The Role of Childhood Circumstances," Working Papers 201319, Geary Institute, University College Dublin.
    12. Arne Risa Hole & Anita Ratcliffe, 2015. "The impact of the London bombings on the wellbeing of young Muslims," Working Papers 2015002, The University of Sheffield, Department of Economics.
    13. Johnston, David W. & Schurer, Stefanie & Shields, Michael A., 2013. "Exploring the intergenerational persistence of mental health: Evidence from three generations," Journal of Health Economics, Elsevier, vol. 32(6), pages 1077-1089.
    14. Daly, M. & Delaney, L., 2013. "The scarring effect of unemployment throughout adulthood on psychological distress at age 50: Estimates controlling for early adulthood distress and childhood psychological factors," Social Science & Medicine, Elsevier, pages 19-23.
    15. Julia S. Goldberg & Marcia J. Carlson, 2012. "Getting Inside the Family: How Parents' Relationship Quality Is Linked to Children's Behavior in Married and Cohabiting Families," Working Papers 1428, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Research on Child Wellbeing..

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