The preoccupied parent

• Published in: Journal of behavioral and experimental economics 2023-08, Vol.105, p.102030, Article 102030
• Main Authors: Burlacu, Sergiu, Mani, Anandi, Ronzani, Piero, Savadori, Lucia
• Format: Article
• Language: English
• Subjects: Early childhood; Household decisions; Parenting; Psychology of poverty; Scarcity; Subsidies
• ISSN: 2214-8043; 2214-8051
• DOI: 10.1016/j.socec.2023.102030

We examine the hypothesis that low parental investments in children may be a consequence of the adverse cognitive effects of poverty: financial worries preoccupy low-income parents with immediate concerns, shifting their attention away from stimulating parenting tasks. We test this hypothesis in an online experiment studying the purchase decisions of UK parents, including their responsiveness to financial subsidies for child development products. Both low and higher-income parents respond to a subsidy on such products, increasing their demands. However, when primed with financial worries under the same budget, low-income parents respond less to the subsidy, prioritizing instead the purchase of products addressing immediate household needs. This lower responsiveness to subsidies appears to be driven by worried parents further away from their last payday. Stronger safety nets and better alignment of financial subsidies to payday cycles may help achieve more investment and better child outcomes in poorer families. •We examine if low parental investments is due to the cognitive effects of poverty.•We propose a novel, incentive-compatible, budget allocation task.•We randomly trigger financial worries and offer a subsidy on child investment goods.•When financial worries are less salient, low-income parents respond to the subsidy.•Financial worries hinder low-income parents’ response to child investment subsidies.•The effect appears driven by low-income parents farther from their last payday.•Subsidies accounting for payday cycles may enhance parental investments.