The Origins of Happiness

Family Income

The Effect of Family Income on

Intellectual Performance

By contrast, if we turn to intellectual performance there are

effects of a different magnitude, as Table 10.3 shows. The

β- coefficient (or partial correlation) between income and

intellectual performance is close to 0.14 at every age. And

the effect of a 10% rise in family income is a rise of 0.024

standard deviations in intellectual performance.^8

So suppose one considers a poor family with one child

and a total household income of £15,000. This implies that

for roughly £10,000 (a 4% increase each year for 16 years)

the child’s GCSE performance could improve by 0.010 stan-

dard deviations.

Table 10.2. How children’s behavior is affected by family income

(ALSPAC)

Effect on standardized
behavior at β- coefficient

Log income

unstandardized

16 0.08 (.02) 0.13 (.04)

11 0.06 (.02) 0.10 (.03)

5 0.02 (.01) 0.03 (.02)

Table 10.3. How children’s intellectual performance is affected by

family income (ALSPAC)

Effect on standardized
intellectual performance at β- coefficient

Log income

unstandardized

16 0.14 (.01) 0.24 (.02)

11 0.14 (.01) 0.24 (.02)

5 0.13 (.01) 0.21 (.02)