Finally, we consider the evidence from studies making use of SEM
techniques. We identified 22 such studies: two are from the UK, one is from Finland and the rest are from the US. In order to be included the studies had to have a measure of financial resources at the household level, and aim to investigate one or more potential mechanisms between financial resources and children’s outcomes (or intermediate outcomes such as parenting).
Although not all the studies reference either of the theories by name, they all test mechanisms related to either the Family Stress Model or the Investment Model. However, none of the studies investigate the Investment Model on its own, and more attention seems to have been given to the Family Stress Model using this technique (14 of the SEM studies test the Family Stress Model alone and the rest consider both models together). As well as receiving less attention, the measures used for the Investment Model are often limited to the physical home environment and cognitively stimulating resources, although some studies also included measures of extracurricular activities and trips outside the home (Gershoff et al., 2007). Some of the measures used for the Investment Model also overlapped with the Family Stress Model in relation to parenting behaviours: for example, measures of cognitive stimulation often referred to parents reading to their child and interacting in a cognitively stimulating way, as well as the presence of cognitively stimulating resources.
Of the 14 studies that test the Family Stress Model, three investigate the relationship between income and parenting behaviours as an outcome, with parental mental health and marital interaction as mechanisms between the two (Leinonen et al., 2002; Evans et al., 2008, Lee et al., 2009) and the rest include measures of parenting as a mediator between family income and children’s cognitive and behavioural outcomes, along with other mediators such as maternal depression. All studies provide support for the Family Stress Model, with all variables included as mechanisms showing significant results for the indirect association between financial resources, parental stress or mental health, parenting behaviours and (for those that include it in the model) children’s cognitive and social and behavioural outcomes. For a more detailed summary of results from these studies, including differences in pathways and mechanisms included, see Appendix 5 (http://sticerd.lse.ac.uk/ case/_new/research/money_matters/children.asp).
The rest of the studies discussed here test both models simultaneously. All studies find support for both models although evidence on the relative importance of different pathways for different outcomes was mixed. For example, Linver et al. (2002) found that as expected measures related to the Investment Model (physical home environment) explained indirect ‘effects’ of income on children’s cognitive outcomes but not social and behavioural outcomes, while measures from the Family Stress Model (maternal mental health and parenting style) explained the relationship between income and social and behavioural problems. Similarly, Altschul (2012) found that only the Investment Model (measured as educational resources and extracurricular instruction) explained educational achievement. However, other studies have found evidence that the models are not restricted to distinct types of outcomes, with measures from the Family Stress Model explaining cognitive outcomes (Guo and Harris, 2000) and the Investment Model also explaining behavioural outcomes (Eamon, 2000; Eamon, 2002). The differences in results are likely to be due to different measures of mechanisms and outcomes used (Appendix 5 provides these details, see http://sticerd.lse.ac.uk/case/_new/research/money_matters/children.asp). Some studies find that variables representing the two models interact (Gershoff et al., 2007; Yeung et al., 2002; Eamon, 2002). For instance, Eamon (2002) found that behavioural problems influence cognitive
outcomes, so any pathway that affects the former will also affect the latter. Yeung et al. (2002) found Investment Model mechanisms also affected maternal psychological well-being and parenting practices, among other cross-overs between the two models, and conclude that the Investment Model and Family Stress Model should be considered together.
Summary
In sum, it is beyond the scope of this study to provide a comprehensive exploration of the mechanisms through which income affects particular outcomes. But we have examined the evidence from our main studies and from additional studies using SEM in relation to two central theories about possible pathways: the Investment Model and the Family Stress Model.
Evidence from our main studies provides stronger support for the Family Stress Model, with income affecting children’s outcomes through parental mental health and parenting behaviours. There is mixed evidence in support of the Investment Model, through which additional income allows families to buy goods and resources which promote their children’s development, with some indication that investment mechanisms may be more important
for cognitive development and family stress mechanisms for behavioural outcomes.
Evidence from the SEM studies also supports both the theoretical models, although less attention appears to have been given to the
Investment Model and this was not explored by any of the SEM studies on its own. Some of the SEM studies suggest that the material and psychosocial pathways outlined by the two models are not entirely distinct and may interact with each other.
Understanding the mechanisms through which income affects outcomes is particularly important because many of the studies identifying a causal relationship are from outside the UK, largely from the US, raising concerns about how far findings can be generalised to the UK context. In fact, the central mechanisms that emerge as important – parental stress and mental health, parental relationship quality, parenting behaviours, and to a lesser extent investment in educational resources and the physical environment – are likely to be equally relevant to the UK. However, the question of pathways from income to children’s wider outcomes deserves much greater consideration than has been possible here and is worthy of exploration in future research, with further insight to be gained from qualitative as well as quantitative research.