How Does Household Income Affect Child Personality Traits and Behaviors?

Existing research has investigated the effect of early childhood educational interventions on the child’s later-life outcomes. These studies have found limited impact of supplementary programs on children’s cognitive skills, but sustained effects on personality traits. We examine how a positive change in unearned household income affects children’s emotional and behavioral health and personality traits. Our results indicate that there are large beneficial effects of improved household financial wellbeing on children’s emotional and behavioral health and positive personality trait development. Moreover, we find that these effects are most pronounced for children who are lagging behind their peers in these measures before the intervention. Increasing household incomes reduce differences across adolescents with different levels of initial emotional-behavioral symptoms and personality traits. We also examine potential channels through which the increased household income may contribute to these positive changes. Parenting and relationships within the family appear to be an important mechanism. We also find evidence that a sub-sample of the population moves to census tracts with better income levels and educational attainment.