Does money affect children’s outcomes?
The studies indicated clearly that money makes a difference to children’s outcomes. Less well-off children have worse cognitive, social-behavioural and health outcomes in part because they are poorer, not just because low income is correlated with other household and parental characteristics. Low income affects direct measures of children’s well-being and development, including their cognitive ability, achievement and engagement in school, anxiety levels and behaviour. The evidence on cognitive development and school achievement was the clearest and most common, followed by that on social and behavioural development. Of the 34 studies, only five found no evidence of a money effect on any of the outcomes examined, with methodological reasons for this in at least four cases.
The studies also found effects of low income on outcomes that indirectly affect children, including parenting, the home environment, maternal depression, and smoking during pregnancy. The effect of low income on cognitive and schooling outcomes appears to correlate broadly with the effects of spending corresponding amounts on school or early education programmes. Rough calculations suggest that increases in household income would not eliminate differences in schooling outcomes between low-income children and others, but could contribute to substantially reducing these differences. For example, increasing household income for children in receipt of free school meals (FSM) by £7,000, which would raise them to the average income for the rest of the population, might be expected to eradicate around half the gap in Key Stage 2 outcomes between FSM and non- FSM children.