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Household income plays crucial role in determining a child’s prospects – report

The importance of money in determining a child’s life prospects is highlighted in a major new study published today – with household income found to have a significant impact on everything from children’s cognitive and educational outcomes to their social development and physical health.

“We can now confidently say that money itself matters and needs to be taken into account if we want to improve children’s outcomes,” says the review’s co-author, Kerris Cooper. “We often focus on gaps at school – but what the evidence shows is that money doesn’t only make a difference to children’s cognitive outcomes, it also makes a difference to their physical health, to birth weight, and to social and behavioural development.”

Fifty-five of 61 studies carried out in eight countries over the past three decades showed increases in income to have a positive effect across a variety of measures, according to the systematic review carried out by Cooper and Kitty Stewart of the Centre for Analysis of Social Exclusion at the London School of Economics.

The strongest evidence points to causal relationship between income and cognitive gains: an increase of US$1,000 in the year 2000 (roughly £860 in today’s currency) is associated with an improvement of between 5 and 27% in the “standard deviation” – meaning 5 to 27% of the gap between a poor and an average child would be closed if the former’s family had its income increased by this amount.

One US study, based on a randomised control trial and published last year, also shows how increased income reduces the likelihood of abuse or neglect.

While some of the effects seem modest in size – the measurable effects in the most recent studies, all of which were carried out in OECD or EU countries, ranged from 1 to 15% – researchers and campaigners say the significance of findings based on so much high-quality evidence, about so many millions of people, cannot be overestimated.

Alison Garnham, chief executive of Child Poverty Action Group, says the findings are a “hugely inconvenient truth for a government committed to implementing benefit cuts that are expected to tip more families into poverty and make already-poor families significantly worse off”. She adds: “When hard-up families have more money coming in, we know the extra is spent on fruit, vegetables, books, clothes and toys.”

The research, funded by the Joseph Rowntree Foundation, builds on a 2013 review with data from 27 studies published over the past five years, including four British ones. The study also looked at intermediate outcomes – that is, factors known to have a knock-on effect on children’s progress – and in the case of maternal mental health, found some of the strongest evidence that a lack of money has adverse effects.

Significantly, the measurable impact of increasing a family’s income is similar in size to the measurable impact of investment in education – suggesting that attempts to boost poorer children’s attainment at school, for example via the pupil premium paid to schools educating the poorest children, or subsidised early years education and nursery places – may be misdirected, if at the same time family incomes are falling.

Closing the income gap between the households of children entitled to free school meals and average households, the researchers estimate, might be expected to reduce the achievement gap by more than half, while at the same time delivering other positive effects such as health benefits in the home.

While the correlation between a child’s deprivation and bad outcomes ranging from lower test scores to physical abuse has been widely recognised for decades – Child Poverty Action Group was set up in 1965, and reducing child poverty was one of the pillars of New Labour social policy – the growing body of scientific evidence showing a causal relationship between financial income and children’s outcomes is highly significant in policy terms.

Child poverty in the UK has increased sharply since 2013 following benefit cuts, and the Institute for Fiscal Studies forecasts a further 50% increase in relative child poverty between 2014/15 and 2020/21. Last month, the social mobility commission chaired by former health secretary Alan Milburn delivered its report on two decades of government efforts to increase social mobility, and concluded that they have not worked. While early years and schools policies were found to have been more successful than those aimed at youth and employment, the report said it would take 40 years to close the gap between poor five-year-olds and their better-off peers.

Now campaigners believe the changed economic position, combined with new evidence from social scientists and neuroscientists investigating the impact of poverty on the development of young children’s brains, should prompt a rethink, particularly since there is little evidence that unemployment itself affects child outcomes, while some evidence on parenting interventions is mixed.

“I don’t think we can say that parenting classes and those kinds of investments aren’t important,” says Cooper, “but what we can say is that the economic context in which parenting takes place cannot be ignored. You are only going to get so far by focusing on parenting classes if you don’t address income poverty at the same time.”

Cooper’s own research on parenting finds mixed results, with some evidence showing that poorer parents help children more with maths and writing, but score “worse” when it comes to the number of outings and trips, and the amount of time children spend watching television or playing on computers.

Labour MP Frank Field is one of those associated with the shift away from poverty reduction measures and towards “non-financial elements”. Commissioned by then-prime minister David Cameron in 2010 to produce a report aimed at refocusing government efforts on behalf of poor children away from income transfers, Field recommended a new set of “life chances indicators” and argued that their experiences of the first five years of life “matter more to children than money”.

Seven years on, he stands by his report’s finding that factors including maternal mental health and home learning environment trumped income and class in determining how ready children are for school. But he points out this research was done in 2010 “when families were doing massively better” – before the full impact of the recession was felt, and before the “mega mega mega cuts” to benefits that have seen families’ income decline “to the extent that we are seeing the emergence of destitution”. Today, Field believes reversing these cuts should be Labour’s priority.

The newly appointed children’s minister Robert Goodwill, when asked whether insufficient attention had been paid to the impact on children of income itself, referred instead to the government’s record on getting parents into work. “Work and education are the best routes out of poverty,” he said. “Employment levels are at a record high, and there are 590,000 fewer children in workless families compared with 2010.”

Goodwill added that the attainment gap between better- and worse-off pupils is narrowing, and highlighted the continuation of the pupil premium, alongside investment in 12 of what the government calls “social mobility coldspots”.

Alternative explanations for unequal outcomes, such as genetic differences, have not gone away. Though they are sometimes shy about saying so in such bald terms, some defenders of a highly stratified system – in which inequality itself is not seen as a problem, so long as mechanisms exist to enable some of those who start at the bottom to rise to the top – continue to believe that richer people as a rule are cleverer and more deserving of success. An echo of this view can be heard in Theresa May’s “great meritocracy” speech last year, in which she described meritocracy as a way of assisting “the brightest among the poor”, and repeatedly distinguished “talent” from “hard work”.

“It’s all connected up,” says Cooper. “The implication that workless parents with less education parent differently … is part of the same idea that poor people themselves are to blame for their children’s outcomes, not the structural and economic conditions of poverty.”

It seems unlikely that policy-makers will heed the researchers’ call to look afresh at income inequality when considering childhood outcomes – and, crucially, to increase state benefits to the poorest families who, in the UK, have seen them removed. But should this government or another one seek a change of direction, there is now plenty of evidence to back them up.

  • Share your experiences of childhood inequality with us by emailing inequality.project@theguardian.com