permanent income has a larger impact than short-
term or transitory changes. Just as it is important
for policy formulation to clarify whether periods
of low income have a greater impact at some life
stages than at others, so is it key to understand the
cumulative effect on children of long-term exposure
to limited financial resources. In practice, however,
very few of our main studies are able to shed clear
light on this question.
We did identify a large number of observational studies which examine the difference between short-term and longer-term experience of poverty. Almost all of these find that longer-term poverty is associated with worse intermediate outcomes, including parenting and the home environment, and with poorer outcomes for children in health, cognitive development and educational attainment, and social and behavioural outcomes. We summarise this evidence briefly below, and provide more details on the relevant studies in Appendix 8 (see http://sticerd.lse.ac.uk/case/_new/ research/money_matters/children.asp), but we caution that it cannot be used to draw conclusions about causality, for two separate reasons. First, it is clear that households that spend longer in poverty may differ from those that only experience short-term poverty in ways that cannot be controlled for in the data. Second, income measured at a single point in time is more vulnerable to measurement error, so longer-term measures may show stronger associations with child outcomes simply because they give us a more accurate picture of income. We think these problems present stronger objections to the use of the secondary, associational studies in relation to this question than to those on non-linearities and timing discussed above. However, five of our main studies address the issue of permanent versus
short-term income and these support the idea that longer-term income has the greater effect.
Outside of our main evidence base, we identified 23 secondary studies exploring the different association between short-term and longer-term income and children’s outcomes. Almost all focus on the bottom of the distribution, asking whether a longer duration of poverty (more years in which the household fell below the poverty line – usually understood as the official poverty definition for that country) has more negative associations than a more transitory experience of poverty (usually understood as being poor at the time at which the outcome in question was measured).
Most of these studies (14) are from the US, and using a variety of datasets these tend to find that spending more years in poverty is worse than a short-term experience for a range of outcomes. In early childhood, studies point to a stronger association with longer poverty duration for cognitive and language development; social and behavioural development; emotional well-being; and physical health as rated by mothers. Studies looking at adolescence also find stronger associations for social, behavioural and emotional development; for high school completion; and for health measured by asthma prevalence and by cortisol and cardiovascular response. (See Appendix 8 for references and details – http://sticerd.lse.ac.uk/case/_ new/research/money_matters/children.asp)
Four studies look at Australia, three using a single dataset, a prospective longitudinal study which followed babies born in Brisbane between 1981 and 1984 until they were 21. These find that recurrent experiences of family poverty had stronger associations with behavioural problems at age 5, cognitive development at age 14, aggressive or delinquent behaviour at 14 and 21 and alcohol consumption at 21 (Bor et al., 1997; Najman et al., 2009; Najman et al., 2010). The fourth Australian study examines a younger cohort followed in Perth between 1989 and 1991 and followed up to age 14. This finds that children in chronically low income households had a considerably higher risk of asthma than children in households with increasing income, while there was no association between asthma and single point measures of low income. One study from Quebec uses an annual survey following newborns to age 5, and finds that income averaged over all previous years has a stronger association with health in each wave than contemporary income (Lefebvre, 2006).
The three studies on the UK all make use of the first two or three waves of the MCS (to age 5). One of these is only able to look at two waves of data, and finds mixed evidence that poverty at both 9 months and 3 years has worse associations than poverty at either one (Kiernan and Mensah, 2009). But the other two studies make use of three waves, and find that being poor in all three waves has stronger associations with both cognitive and behavioural development than being poor in just one or two, although any experience of poverty predicts lower scores (Kiernan and Mensah, 2011; Holmes and Kiernan, 2013).
However, in addition to Kiernan and Mensah (2009), four other studies indicate exceptions to the general rule that chronic experience of poverty has stronger associations with outcomes than a short-term poverty experience. Three of these used different cohorts of the same dataset, the US NLSY. McLeod and Shanahan (1993) found that while persistent poverty affects internalising behavioural symptoms beyond the effect of current poverty, only current poverty predicted externalising symptoms for 4–8 year olds in 1986. For children aged 6–9 years old in 1992, Miller and Davis (1997) found recent experience of poverty to be associated with deficits in the home environment nearly as largely as those associated with