We examine the effect of survey measurement error on the empirical relationship between child mental health and
personal and family characteristics, and between child mental health and educational progress. Our contribution is
to use unique UK survey data that contain (potentially biased) assessments of each child’s mental state from three
observers (parent, teacher and child), together with expert (quasi-)diagnoses, using an assumption of optimal
diagnostic behaviour to adjust for reporting bias. We use three alternative restrictions to identify the effect of
mental disorders on educational progress. Maternal education and mental health, family income and major adverse
life events are all significant in explaining child mental health, and child mental health is found to have a large
influence on educational progress. Our preferred estimate is that a one-standard-deviation reduction in ‘true’ latent
child mental health leads to a 2- to 5-month loss in educational progress. We also find a strong tendency for
observers to understate the problems of older children and adolescents compared to expert diagnosis