Causal Effects of Household Wealth on Child Development

Co-funded with the W.K. Kellogg Foundation

Children who grow up in relatively poor households tend to do worse on a wide range of outcomes compared to children who grow up in wealthier households; they are at greater risk of low birth weight, less likely to complete high-school or attend college, have lower scores on tests of cognitive achievement and are more likely to be convicted of crime, exhibit behavioral problems and suffer from poor health. However, there remains considerable uncertainty about how to interpret the relationships between income and child outcomes. Credible estimates of the causal impact of household wealth on child outcomes are needed to evaluate the relative effectiveness of policies of income transfers compared to other policy approaches.

Economist David Cesarini will estimate the causal effect of household wealth by exploiting the randomized assignment of prize money in three large samples of Swedish lottery players. Specifically, he seeks to estimate the causal impact of wealth on a wide range of child outcomes, contribute to our understanding of how such effects vary across families, and may help shed light on the causal pathways through which wealth matters. Cesarini will study child health outcomes in seven domains: infant health, adolescent physical health, adolescent mental health, skill formation, scholastic achievement, cognitive and socio-emotional skills, and behavioral/social problems.