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Not all parental debt harmful to child well-being

Debt that affords parents opportunities like home investment and higher education is associated with greater socioemotional well-being in their children, whereas unsecured debt has a negative association, according to a study published in Pediatrics.

“Beginning in the 1980s, financial deregulation increased the supply of credit and gave banks more power to control interest rates, making debt more difficult to repay for the average U.S. family,” Lawrence M. Berger, PhD, MSW, of the University of Winsconsin-Madison School of Social Work and Institute for Research on Poverty, and Jason N. Houle, PhD, of Dartmouth College, wrote. “Given that family finances play a key role in child development, it is plausible that debt is associated with child well-being, although the direction of the association is not clear a priori.”

To estimate the associations between total parental debt, and of individual types of debt — such as home mortgage, student loan, automobile and unsecured — with children’s socioemotional well-being, the researchers analyzed population-based longitudinal data on children and their mothers from 1986 to 2008. They used data available in the National Longitudinal Study of 1979 Cohort and Children of the National Longitudinal Study of Youth 1979 Cohort, a survey administered to mothers with children and adolescents aged 5 to 14 years.

Their analytic sample included 29,318 child-year observations of 9,011 children and their mothers, taken annually or biennially in the survey. The researchers used the Behavioral Problems Index to measure socioemotional well-being, in which mothers answered 28 questions about their child’s behavior and used ordinary least squares regression to measure associations between a child’s socioemotional well-being and parental debt.

Although greater total debt was associated with decreased socioemotional well-being in children, that association varied by debt type. According to the researchers, a 10% increase in total debt would be “roughly associated” with a 0.04 standard deviation (SD) increase in child behavior problems. However, higher levels of home mortgage and student loan debt were associated with greater socioemotional well-being for children, whereas higher levels of, and increases in, unsecured, including credit card, debt were associated with lower levels of, and declines in, child well-being. Between-child estimates indicated that 10% more unsecured debt would be associated with 0.07 to 0.14 SDs more behavior problems, while within-child estimates predicted a 0.05 SD increase.

“Pediatricians should be concerned about the socioemotional development of children whose parents have unsecured debt,” Berger and Houle wrote. “… Given doctors’ time with patients is limited and expensive, one approach may be for the health care providers to flag overdue medical bills and include items about debt struggles on intake forms. This may allow for easy identification of patients who may be struggling with debt, who could then be engaged in a short conversation and perhaps given a referral to a financial coach or community agency that specializes in this area.” – by Jason Laday

Disclosure: The authors report no relevant financial disclosures.