Study reveals what happens to poor children when you give their parents a little money

Twenty years ago, a group of researchers began tracking the personalities of 1,420 low income children in North Carolina. At the time, the goal was simple: to observe the mental conditions of kids living in rural America. But then a serendipitous thing happened.

Four years into The Great Smoky Mountains Study of Youth, the families of roughly a quarter of the children saw a dramatic and unexpected increase in annual income. They were members of the Eastern Band of Cherokee Indians, and a casino has just been built on the reservation. From that point on every tribal citizen earned a share of the profits, meaning about an extra $4,000 a year per capita.

For these families, the extra padding was a blessing, enough to boost household incomes by almost 20 percent on average. But for the fields of psychology, sociology and economics, it has been a gold mine, too. The sudden change in fortunes has offered a rare glimpse into the subtle but important ways in which money can alter a child’s life. The dataset is so rich that researchers continue to study it to this day.

"It would be almost impossible to replicate this kind of longitudinal study,” said Randall Akee, a professor at the University of California, Los Angeles, who studies the impact of changes in household income. “Especially for a sample this large. This is the sort of circumstance you dream of as a researcher."

Seizing the opportunity, Akee, along with a team of other researchers, recently revisited the data to analyze each child’s personality both in the years before the casino was built and in those after.

As part of the original study, the children and parents were asked a series of questions, designed to measure, among other things, a number of personality traits. The same questions were posed every other year, for a decade. Akee's goal was to observe any changes—positive or negative—resulting from the extra household income. Their findings, published by the National Bureau of Economic Research last month, are nothing short of remarkable.

"This was hugely important to the development of the children, to their wellbeing” said Akee. "And the effect wasn’t small either—it was actually fairly large."

Not only did the extra income appear to lower the instance of behavioral and emotional disorders among the children, but, perhaps even more important, it also boosted two key personality traits that tend to go hand in hand with long-term positive life outcomes.

The first is conscientiousness. People who lack it tend to lie, break rules and have trouble paying attention. The second is agreeableness, which leads to a comfort around people and aptness for teamwork. And both are strongly correlated with various forms of later life success and happiness.

The researchers also observed a slight uptick in neuroticism, which, they explained, is a good sign. Neuroticism is generally considered to be a positive trait so long as one does not have too much of it.

"We're talking about all sorts of good, positive, long-term things," said Emilia Simeonova, a professor at Johns Hopkins University who studies the economics of health, and one of the paper's co-authors. "There are very powerful correlations between conscientiousness and agreeableness and the ability to hold a job, to maintain a steady relationship. The two allow for people to succeed socially and professionally."

Remarkably, the change was the most pronounced in the children who were the most deficient. "This actually reduces inequality with respect to personality traits," said Akee. "On average, everyone is benefiting, but in particular it's helping the people who need it the most."

Why exactly this happened with the children neither Akee nor any of his co-researchers can say with absolute certainty. Not even Jane Costello, a professor at Duke University who was part of the team that initiated the original study and co-authored the recent paper can say. But they have a few ideas, based on observable changes in the families after the casino was built and the extra money started to flow in.

They know, based on the interviews with parents, that the relationship between spouses tended to improve as a result. They also know that the relationship between the parents and their children tended to improve. And they know that parents tended to drink less alcohol.

"There is a lot of literature that shows in order to change outcomes among children you are best off treating the parents first," said Simeonova. "And these are really clear changes in the parents."

There's also the question of stress, which the extra money helps relieve—even if only a little. While the added income wasn't enough to allow parents to quit their jobs, it's a base level that helped with rent and food and other basic expenses. That, Akee said, is powerful enough itself.

"We know that the thing poor couples fight about the most is money," he said. "Off the bat, this means a more harmonious family environment."

And some of the families, given the boost, even moved to areas with slightly better census tracts in terms of both income and education. They were, in other words, able to expose their children to a different group of peers.

For the most part, scientists agree that the window for improvement in a child's cognitive abilities is short-lived. By the age of about 8, children have set themselves on a path, Akee said. What comes next happens, more or less, within the confines of the limits that were created in their early years.

One's personality, on the other hand, is malleable well into adolescence. What's more, the changes tend to be fairly permanent.

"All of the evidence points to the idea if they change in the teenage years, they will stay changed forever," said Akee. "In this case, the kids will likely maintain a different level of conscientiousness and agreeableness for life."

Experts have known about the power of intervention for some time. A lot of previous research has shown that educational interventions can have sizable impacts on personality traits and, in turn, life outcomes. But rarely, if ever before, have researchers been able to observe the impact of a change in income across such a large group.

The takeaway isn't that casinos are inherently benevolent institutions. But rather that money—even modest sums—can be a pretty powerful thing. And for reasons most would likely overlook.

"We know that low income kids are worse off in a number of ways, in terms of cognitive abilities and behavioral disorders, than their counterparts in much more affluent areas," said Simeonova. "Now we have a sense of what even just a little money can do change these things, to change their lives."

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