Money and the mind: Child brain development linked to family finances

For years, researchers have speculated that a child’s development is directly tied to their family’s financial situation. However, despite this likely correlation, no definitive link has ever been shown or proven. Now, new research demonstrates that an increase in family finances can have an immediate and measurable impact on a child’s brain development, according to a team of researchers at six universities across the U.S.

Several socioeconomic factors appear to influence child development, though the precise impact of each is unclear. With this study, researchers focused solely on the link between family finances and brain development. They sought to determine whether a simple increase in a family’s monthly income would be beneficial.

Researchers conducted the yearlong study on 435 one-year-old children, recruiting low-income mothers from postpartum wards in four different cities across the U.S.

The participants were then given a monthly stipend of either $333 or $20, which the mothers were free to spend on anything they chose—no strings attached. Afterward, they measured the brain activity of the participating infants, using a technique known as electroencephalography to measure the brain’s electrical signals.

As expected, the brain activity of infants from families who received $333 per month was far higher than that of babies whose families received only $20 per month.

“All healthy brains are shaped by their environments and experiences, and we are not saying that one group has ‘better’ brains. But, because of the randomized design, we know that the $333 per month must have changed children’s experiences or environments, and that their brains adapted to those changed circumstances,” says senior author Kimberly Noble in a statement.

Given the study’s randomized control design, researchers were able to demonstrate a distinction between simple correlation and causation, determining that an infusion of cash for low-income mothers led to a direct change in a child’s brain activity.

What changes were made by those mothers who received $333 per month is not yet known, including what each mother spent the money on or how it altered parenting styles and family relationships. While the specifics are not yet known, the evidence appears substantial that just a few hundred more dollars per month can provide monumental benefits to low-income mothers.

“The potential promise of money as a way of directly supporting families is that it allows parents to make choices about what their children most need. Thus, there may not be just one way in which money positively affects families; money may matter in a lot of small ways,” says co-author Katherine Magnuson in a statement.

While the study was not spurred on or planned in conjunction with the Child Tax Credit expansion payments in 2021, the coincidental timing may also provide insight into the beneficial nature of such payments both now and in the future.

This paper is published in the Proceedings of the National Academy of Sciences.

Article written by Adam Swierk

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