One of the things that I think a lot about is responsibility. In our social, economic, and political lives, we don’t want people to suffer from things outside of their control. But, we also want to hold people responsible for those things within their control. This balance is a constant struggle for economic policy.

For example, we have a food stamp program because sometimes people can’t work for reasons beyond their control. I don’t know…perhaps because of a global pandemic? The food stamp program served as a major bulwark against the surge in unemployment that occurred in March and April of 2020. The flip side is that any means-tested program — like food stamps — can discourage people from working. This work disincentive happens because the value of food stamps fades with higher incomes. So, people may choose not to work to maintain their benefits, a behavior within someone’s control that we do not want to encourage. The desire to prevent faultless suffering and to encourage good behavior is a constant tension for policymakers.

But, events like the COVID-19 Pandemic are visible, and the resultant economic aftershocks are widely agreed to be out of people’s control. As a society, we can react by making programs like food stamps more generous. And, we can pull back when the economy-wide damage has been judged to have passed. But, what about when the damage is individual specific, hard to see, and might last a lifetime? Something like childhood abuse.

The Economic Impact of Childhood Abuse

In this post, I want to explore the correlation between childhood abuse and later life economic outcomes. Doing that requires a unique set of information — the combination of data on childhood environment and late-life economic variables. Luckily, the National Longitudinal Survey of Youth contains this information.

The National Longitudinal Survey of Youth (NLSY)

In 1979, the U.S. Bureau of Labor Statistics began following over 12,000 individuals who were in their late teens. By 2018, the most recent year of data available, those individuals were in their 50s (because, sadly, that’s how time works). Along the way, these individuals were asked about tons of things you would expect — about their jobs, earnings, wealth, marriages, kids, etc. But, in 2012 they were also asked questions about their childhood and experiences of abuse. These questions provide a window into these individuals’ early lives, so we can examine how those experiences might impact their economic existence.

In particular, the two questions I will use for this post are on physical abuse and neglect. Individuals were asked how often they had experienced severe physical abuse before the age of 18. On neglect, individuals were asked: “[b]efore age 18, how much parental love and affection did you receive growing up? Would you say a great deal, quite a lot, a little, or none at all?” For purposes of this post, I will be comparing people who experienced at least one instance of physical abuse or who said they experienced little or no love at home to those without those experiences.

Within the sample of over 7,000 people who answered these questions, about a quarter said that they had experienced physical abuse and/or neglect when younger. Later in life, how did these individuals differ from those lucky enough to have not suffered this abuse?

The Long Arm of Childhood Abuse

The sad truth is that individuals who have experienced abuse differ substantially from those that have not. In their early lives, 13 percent of the abused drop out of high school, compared to 8 percent for the non-abused. And in relationships, the abused experience less stability. The marriages of people who experienced neglect or physical abuse end in divorce half the time. Compare this to 39 percent for those that did not experience it.

Indeed, throughout their adult lives, those that suffered childhood abuse appear to struggle. When looking at their careers, these individuals are roughly 7 percent less likely to work in any given year. And, when they do work, the abused earn less as well — $33,500 versus $36,500 on average. Even their health seems to suffer. When asked, 50 percent of those that experienced childhood abuse said that they were in “Good” or “Excellent” health. For those that didn’t experience abuse, that number is 60 percent.

By the end of their working lives, the consequences of less education, a higher rate of divorce, fewer years working, lower earnings, and poor health have piled up. The figure below shows the evolution of median net worth (assets minus debt) for those who did versus did not experience childhood abuse. By their mid-50s, those that experienced childhood abuse have a net worth equal to just 57 percent of those that did not.

Figure. Median Net Worth for NLSY 1979 Cohort

So, things that happen to people long ago appear to affect the trajectory of their lives. Surprising? Perhaps not. But, I think it highlights something important. Often times, we can’t see the things that affect people. Maybe someone has less wealth than you because they haven’t worked as hard. Or, maybe, they’ve been through something that you haven’t. You just can’t know.