Association for Public Policy Analysis & Management

Subjective financial stress, the perceived stress or worry about current or future financial circumstances, is a primary concern for families across the world (Gesellschaft für Konsumforschung, 2015). A large body of literature has shown that subjective financial stress is a key mediator of the effects of objective hardship (i.e. income poverty and employment instability) on family functioning, including harsh parenting and child maltreatment (Conger et al., 1993, 1994; McLeod & Shanahan, 1993). However, recent evidence suggests that families do not necessarily need to experience objective hardship to perceive financial stress. In a 2009 national survey in the United States, 67.2% of families with children reported subjective financial stress, including families in the top income decile and families who reported no difficulty paying for basic expenses (Gauthier & Furstenberg, 2010). In fact, financial stress is a more pervasive experience than objective poverty (American Psychological Association, 2008). Yet, little is known about the effects of financial stress on parents and children over and above the influence of objective hardship. This paper addresses this gap in knowledge using data from the Millennium Cohort Study, a longitudinal study of children growing up in the United Kingdom, to test whether subjective financial stress has a unique association with harsh parenting behavior.

Data and Methods

This study uses data from the first four waves of the Millennium Cohort Study (MCS). The MCS data were collected between 2000 and 2008, when children were aged 9 months, and then 3, 5, and 7 years (n = 13,857 families). The MCS data include measures of psychological and physical aggression in parenting, as well as measures of family-level objective economic and subjective financial stress. Mixed effects regression models are used to assess the unique association of within-family differences in financial stress and parenting behavior over time. Family-level fixed effects are included to control for any stable, unobserved differences between families that can influence both financial stress levels and parenting behaviors. The models also control for observed factors that may be associated with both financial stress and harsh parenting behavior at any given time, such as parental depression, anxiety or efficacy, as well as children’s earlier problem behavior.

Preliminary Results

Though objective hardship and subjective financial stress were significantly correlated, this correlation is not very strong (r = 0.51, p < 0.01). This suggests that parents need not experience objective hardship to perceive financial stress. Indeed, controlling for objective hardship, family demographics, and parents’ psychological well-being, as well as family fixed effects, being financially stressed was associated with an 17.50% increase in the odds that parents will use psychological aggression more than once a week when their child has done something wrong (p < 0.05). However, subjective financial stress is not associated with an increase in the odds of using physical aggression in parenting. Additional analyses will assess whether this effect differs based on families’ socioeconomic status.