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Parents' Debt Impacts Kids' Well-Being

But its effect can be positive or negative, depending on the specific type of indebtedness.
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(Photo: littleny/Shutterstock)

(Photo: littleny/Shutterstock)

It's hard to find too many people who aren't in some sort of debt. Home mortgages, credit card balances, student loans—these are realities of modern American life, especially for hard-pressed parents of young children.

No doubt mothers and fathers tell themselves they're incurring debt for the sake of their offspring—to provide them with goods and experiences the family couldn't otherwise afford. But are they hurting their kids in the process?

Newly published research suggests that they may very well be. It all depends upon the type of debt parents are incurring.

In a large-scale, longitudinal study featuring more than 9,000 children, unsecured debt—that is, credit card balances and unpaid medical bills—was "positively and significantly associated with child behavior problems."

Investing in your family's future can be good for your children. But living beyond your means can have the opposite effect.

"Higher levels of home mortgage and education debt were associated with greater socio-emotional well-being for children," the researchers write in the February issue of the journal Pediatrics. "This suggests that debt is not universally harmful for children's well-being, particularly if used to invest in a home or education."

Lawrence Berger, director of the Institute for Research on Poverty at the University of Wisconsin–Madison and Dartmouth College sociologist Jason Houle analyzed data on 9,011 children and their mothers who participated in the 1979 cohort of the National Longitudinal Study of Youth. Information on household debt and children's behavioral problems was collected every other year, when kids were between the ages of five and 14.

Specifically, each mother was asked whether her child had engaged in any of 28 "problem behaviors." These included "sudden mood changes," "cheats, tells lies," "can't concentrate," "bullies," and "impulsive."

Household debt was broken down into four categories: mortgages or home equity loans; student loans; automobile loans; and "unsecured debt," which includes credit card debt, medical debt, and other money "owed to businesses, individuals, or banks."

The researchers found greater total debt was associated with poorer child behavior—but this association varied by the type of family debt.

"Specifically, higher levels of home mortgage and education debt were associated with greater socio-emotional well-being for children," they write, "whereas higher levels of, and increases in, unsecured debt were associated with lower levels of, and declines in, (their) well-being."

This association remained significant after controlling for such factors as the mother's marital status and education level, household size, and household income.

The results suggest credit card and other unsecured debt "may reflect limited financial resources to invest in children, and/or parental financial stress." In contrast, home loan and student loan debts suggest a parental impulse to better their job prospects, and perhaps re-settle in a better, more kid-friendly neighborhood.

"Our results suggest that unsecured debt, and perhaps the financial deregulatory policies that precipitated the rise in debt, is linked to poorer socio-emotional development for children," the researchers conclude. "This is of concern," they add, given that such issues have been "linked to a range of adverse outcomes throughout the life course."

They suggest that health-care providers could "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."

So investing in your family's future—even if it means going into debt—can be good for your children. But living beyond your means, when it doesn't reflect that sort of future-oriented mindset, can have the opposite effect.

It seems giving in to your kid's desire to own that Xbox is not worth the trade-off—if you have to take on more debt to buy it, and, as a result, you're a stressed-out, less-present parent.


Findings is a daily column by Pacific Standard staff writer Tom Jacobs, who scours the psychological-research journals to discover new insights into human behavior, ranging from the origins of our political beliefs to the cultivation of creativity.