You owe, you owe, so off to work you go. The Federal Reserve has estimated that, as of fall 2015, the average American household owed $47,712 on student loans, $165,892 on a household mortgage and $15,355 in credit card debt.1,2 Such debt worries parents and new research published this month in Pediatrics (10.1542/peds.2015-3059) suggests that debt can also produce behavior problems in children. The research also suggests that the type of debt matters and that children pay an emotional price at young ages.The two Wisconsin authors studied 9,011 children aged five to fifteen years, along with their mothers, during a twelve-year period (1996-2008). The mothers reported every other year on the socioemotional well-being of their children and also reported on family debt, including home mortgages, educational loans and credit card debt. The researchers used two longitudinal studies of infants born in 1979 that included periodic interviews of the mothers, beginning in 1996 when the children were five years old. The data used were the National Longitudinal Study of Youth (NLSY-79)1979 Cohort and the Children of the NLSY-79.
Children’s status was assessed using the Behavioral Problems Index (BPI), a 28-item questionnaire that assessed various problem behaviors. The researchers age-standardized the total score in three-month intervals. The mothers were asked about total debt burden, and the type including home mortgage, educational loans, auto loans and unsecured debt (typically credit card debt). The authors reported debt burden as 2013 dollars.
The researchers found that increases in total parental debt were associated with declines in children's socioemotional well-being. Mortgage debt and educational loans were associated with better well-being in children, but unsecured debt (e.g. credit card debt) was associated with worse outcomes and declines in child socioemotional status. An increase from $5,000 in debt to the average reported level of $10,000 was associated with a 35% increase in behavior problems, according to the researchers. But the kind of debt matters. The researcher found that home mortgage debt and educational loans are associated with an increase in childhood well-being, but unsecured debt like credit cards is associated with decreases in children’s well-being.
The Wisconsin study differs from earlier studies because it focuses on well-being among children. Older studies examined trends among adults. The long-term consequences of poverty in childhood have been well-documented, but this study suggests those effects can take a toll early or produce a better future for children. Debt that allows for investment in homes (and perhaps access to better neighborhoods and schools) and parental education is associated with greater socioemotional wellbeing for children. Unsecured debt is negatively associated with socioemotional development, which may reflect limited financial resources to invest in children and/or parental financial stress
The authors suggested that identification of parents struggling with debt and appropriate referral to a community agency might help the parents and, in turn, benefit the family’s children.
1. Motely Fool. The Average American Has This Much Debt -- How Do You Compare?
http://www.fool.com/investing/general/2015/01/18/the-average-american-has-this-much-debt-how-do-you.aspx
2. Federal Reserve System. Household Credit and Debt Report. https://www