Expert Commentary

Long-term economic costs of psychological problems during childhood

Paper in the Journal of Social Sciences & Medicine on the long-term economic costs associated with childhood psychological illness

Estimates of the prevalence of childhood depression range from 1% to 2% of all children in the United States, and for adolescents this figure may be as high as 8%. While public awareness of this issue is growing, the long-term economic costs of childhood psychological trauma are largely unknown.

In a paper published in Social Science & Medicine, “Long-term Economic Costs of Psychological Problems During Childhood,” researchers from the RAND Corporation and Washington University School of Medicine used data from the U.S. Panel Study of Income Dynamics (PSID) that followed siblings for 40 years, charting their education, income, work and marriage details. This data was matched with retrospective child health histories to determine if individual subjects had childhood physical illnesses or suffered from depression, substance abuse, or psychological conditions.

Findings of the paper concluded that children who suffered psychological problems:

  • Had an 11% point decrease in the probability of getting married and if they do marry their spouse’s income is on average lower.
  • Enjoyed on average $17,534 less in household assets after controlling for physical ailments and all common family and neighborhood background variables.
  • Received permanently lowered adult earnings, on average $4,094 per year less even after controlling for other factors.

The researchers then applied to these annual losses an average 3% real discount rate, to determine a lost lifetime income figure of approximately $300,000 per person. Based on the current prevalence of childhood psychological disease, this equates to lifetime economic damages for all affected Americans of $2.1 trillion dollars.

Tags: children, youth, cognition