Household dysfunction and child development: Do financial resources matter?

Children who experience household dysfunction often report more developmental problems and lower educational attainment. A question, however, is whether these lower outcomes are caused by the household dysfunction itself, or by other (pre-existing) factors, such as growing up in poverty. Based on the extended family stress model, we derived hypotheses on the consequences of household dysfunction for child development. Furthermore, we considered the mediating and moderating role of parents’ financial resources in the impact of household dysfunction on children's development. We studied these relationships while rigorously accounting for differential selection into experiencing household dysfunction using data from the British Millennium Cohort Study and employing descriptive and fixed-effects analyses. We found that children who experienced household dysfunction after age 5 already had more behavioural problems prior to these experiences. This underscores the importance of accounting for differential selection into experiencing household dysfunction. We also found that household dysfunction beginning after age 5 led to more behavioural problems but did not impact children's verbal ability. Parents’ financial resources declined after household dysfunction, particularly among high-income households. However, we found only weak evidence of a mediating effect of financial resources, and larger declines in financial resources did not translate into larger consequences of household dysfunction among children from high-income households. Financial resources thus mainly seemed to play an important role for selection into experiencing household dysfunction.