The transformations in Russian society that took place in the late twentieth century and early twenty-first century led to a rapid rise in social and economic differentiation. According to official data, the income gap between the 10 percent most-well-off and the 10 percent least-well-off families (the capital coefficient) rose to 14.8 times in 2004 compared to 13.5 times in 1995. This exceeds by one and a half to two times the corresponding figure for the developed countries (4.5 in Japan, 6.9 in Germany, 9.1 in France, and 10.1 in Canada). In Russia in the past ten years, the incomes of the bottom 20 percent of the population fell from 12 to 6 percent, while the proportion of the incomes of the top 20 percent went up from 31 to 47 percent. Although there has been a slight decline in poverty level, it now stands at 40 percent of the total population. In this situation, people do not have equal access to all the resources that shape human potential, and this has a crucial effect on the determinants of children's health. A survey by the Vologda Scientific Coordination Center of the Center of the Central Economics Mathematics Institute [TsEMI], Russian Academy of Sciences, to study the conditions under which children's health and development are formed shows graphically that the division of families in terms of resource potential determines their potential when it comes to children's development. The data in this article relate to 2005; at the time the survey was conducted, the children were ten years old. Drawing on this survey, the author analyzes children's development and concludes that the increasing differentiation of families in terms of their social and economic features is leading to the formation of a defective generation of children and young people. (Contains 9 tables and 5 notes.)