This paper adopts a child-centered perspective to study how children perceive their family’s economic situation. Using linked survey and administrative data for all children aged 8 to 12 living in Luxembourg, we compare children’s self-reported assessments of financial hardship with objective monetary indicators. While child-perceived and income-based financial situations are positively associated, there are substantial discrepancies. At a given level of monetary poverty, children living in single-parent households or in migrant families report higher levels of financial concern. Conditional on socio-demographic characteristics, monetary poverty and income insecurity explain little of the variation in perceived financial hardship. In contrast, the relative income position within schools and child-specific deprivation—particularly limitations in shared family activities—are strongly associated with higher level of financial worries. An analysis of discordance reveals an asymmetry. Overestimation of hardship among non-poor children is more likely for non-natives, those growing up in a lone family or who are poorer than their schoolmates, whereas underestimation among poor children shows weaker and less systematic correlates. These perception gaps matter: children who report perceived financial hardship display lower life satisfaction and worse self-rated health even when they are not monetarily poor, whereas poor children who do not report perceived hardship show well-being levels closer to those of non-poor peers. Overall, the findings indicate that children’s perceptions of economic hardship extend beyond their material living conditions and also reflects their social and emotional environment.
Bousselin et al. (Thu,) studied this question.