Recent research has established evidence of a strong link between poor physical health during childhood (and even in utero) and health and economic outcomes much later in adulthood. But much less is known about the long-term economic consequences of psychological conditions experienced during childhood, although childhood psychological conditions--including depression and substance abuse--are a growing concern for American children. A new study by James P. Smith and Gillian C. Smith funded by the National Institute on Aging seeks to get at this issue. The authors used the Panel Study of Income Dynamics (PSID)--which follows groups of siblings and their parents for up to 40 years, "prospectively" collecting information on education, income, work, and marriage--and a "retrospective" child health history designed by the lead author. That history was placed into the 2007 PSID wave to measure whether respondents had any of 14 childhood physical illnesses or suffered from depression, substance abuse, or other psychological conditions. The study concludes that in some ways, such as the eventual economic costs, pathways related to childhood mental disorders are even more important than those related to childhood physical illnesses. Effective treatments targeted at children that lower the risk of experiencing these psychological conditions or that mitigate their adult psychological and economic consequences are likely to have long-lasting payoffs and to be very cost-effective. Treating children effectively will also likely benefit their parents, siblings, classmates, and neighbors. [This fact sheet is based on James P. Smith and Gillian C. Smith, "Long-Term Economic Costs of Psychological Problems during Childhood," "Social Science & Medicine", vol. 71, no. 1, July 2010, pp. 110-115.]