Extra Household Income Improves Well-Being of Adolescents

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The psychological well-being of adolescent children in low-income Native American families improved significantly after they began receiving annual payments from a casino on their reservation, according to a new study from the Johns Hopkins Carey Business School.

The psychological well-being of adolescent children in low-income Native American families improved significantly after they began receiving annual payments from a casino on their reservation, according to a new study from the Johns Hopkins Carey Business School.

Johns Hopkins Assistant Professor Emilia Simeonova and her co-authors point to this finding as evidence that increasing household income can make life markedly better for poor families, especially the children.

The researchers based their analysis on data originally gathered for the Great Smoky Mountains Survey (GSMS), a longitudinal study launched in 1993 to examine the psychological traits of 1,420 poor children in western North Carolina, including several hundred children in the Native American Cherokee tribe. By happenstance, four years into the study the Eastern Band of Cherokee Indians opened a casino in the survey zone and started designating half of the profits as extra cash income for adult members of the tribe. The impact of this new yearly income – about $4,000 per adult, or 20 percent of the average Native American families’ annual earnings – is what Simeonova and her colleagues focused on.

And what they observed in the Indian children who belonged to households that experienced four years of extra income in the GSMS were clear gains in “conscientiousness” (being organized, responsible, and hard-working) and “agreeableness” (behaving unselfishly). The children even showed progress in an unlikely-sounding measure of good health, “neuroticism.” As Simeonova explained, neuroticism can be a positive trait in small amounts, indicating self-awareness and an ability to appreciate the feelings of others. However, the estimated effects on neuroticism were much weaker, both statistically and in magnitude, than on conscientiousness and agreeableness.

“I was surprised that the findings from our analysis were so clear,” Simeonova said in an interview. “People may assume that giving money to families in need is a good thing, but you still have to prove it. You want to know whether the extra money makes a difference, and in this case I believe we have shown that.”

Other notable surprises, she said, were that changes in personality traits could be seen in 11- and 13-year-olds (ages at which cognitive abilities are considered firmly established), and that the children at lower levels of psychological development exhibited the greatest improvements after the extra income was introduced.

“Previous research shows that low-income parents devote most of their resources to their brighter, more promising children, in the hopes of boosting their educational opportunities. But we saw here that parents were spending more time with their kids who were lagging developmentally. We think this accounts for the fact that these children made the greatest gains,” said Simeonova, who earned her doctorate in economics from Columbia University.
With the new money, families that lived on the reservation continued to reside there, but Indian families that lived off the reservation moved to areas of demonstrated higher levels of education and income. Simeonova speculated that the children in the study benefitted from this change in environment.

Otherwise, she stated, the GSMS didn’t reveal how the families spent their additional income. “We saw only the apparent effects of the money,” she said. “For example, the parents continued to work at their usual jobs but reported they felt less stressed in general. They said they fought less with their spouses and with their kids, though the divorce rate of this group didn’t change. There was less alcohol consumption among the parents, and they were less likely to see a mental health counselor. And the kids said that they were getting to spend more time with their parents and that they were enjoying it.”

Showing how a regular, no-strings-attached disbursement of money can benefit poor adolescents is an important new finding that advances the literature, Simeonova added. She suggested that the study is in part an argument for easing the budget constraints of low-income people through regular infusions of money. “We’ve seen in our results that this is a way to improve the lives of the poor, the kids in particular,” she said. “That’s not to say that it would make everything perfect in the lives of these families, but we concluded that the money clearly had major, positive effects.”

Provided she could obtain the funding, Simeonova said, she is interested in looking further into this topic by examining the effects of similar casino-related payments to poor Native Americans across a greater geographic area, as in California.

The paper, “How Does Household Income Affect Child Personality Traits and Behaviors?,” was co-authored by Simeonova; Assistant Professor Randall Akee of the University of California, Los Angeles; and Professor E. Jane Costello and Associate Professor William Copeland, both of Duke. It has appeared as a working paper on the website of the National Bureau of Economic Research and has been presented at academic conferences. Also, it is being prepared for submission to an academic journal.


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