Horney proposes that neurosis is transmitted to a child from their early environment and that there are many ways in which this can occur:: 18 
When summarized, they all boil down to the fact that the people in the environment are too wrapped up in their own neuroses to be able to love the child, or even to conceive of him as the particular individual he is; their attitudes toward him are determined by their own neurotic needs and responses. The childs initial reality is then distorted by their parents needs and pretenses. Growing up with neurotic caretakers, the child quickly becomes insecure and develops basic anxiety. To deal with this anxiety, the childs imagination creates an idealized self-image:: 22 
Each person builds up his personal idealized image from the materials of his own special experiences, his earlier fantasies, his particular needs, and also his given faculties. If it were not for the personal character of the image, he would not attain a feeling of identity and unity. He idealizes, to begin with, his particular "solution" of his basic conflict: compliance becomes goodness, love, saintliness; aggressiveness becomes strength, leadership, heroism, omnipotence; aloofness becomes wisdom, self-sufficiency, independence. What—according to his particular solution—appear as shortcomings or flaws are always dimmed out or retouched. Once they identify themselves with their idealized image, a number of effects follow. They will make claims on others and on life based on the prestige they feel entitled to because of their idealized self-image.
Neurosis is a class of functional mental disorders involving chronic distress, but neither delusions nor hallucinations. The term is no longer used by the professional psychiatric community in the United States, having been eliminated from the Diagnostic and Statistical Manual of Mental Disorders (DSM) in 1980 with the publication of DSM III. However, it is still used in the ICD-10 Chapter V F40–48. Neurosis should not be mistaken for psychosis, which refers to a loss of touch with reality. Nor should it be mistaken for neuroticism, a fundamental personality trait proposed in the Big Five personality traits theory. Etymology
The term is derived from the Greek word neuron (νεῦρον, nerve) and the suffix -osis (-ωσις, diseased or abnormal condition). The term neurosis was coined by Scottish doctor William Cullen in 1769 to refer to "disorders of sense and motion" caused by a "general affection of the nervous system." Cullen used the term to describe various nervous disorders and symptoms that could not be explained physiologically. Physical features, however, were almost inevitably present, and physical diagnostic tests, such as exaggerated knee-jerks, loss of the gag reflex and dermatographia, were used into the 20th century. The meaning of the term was redefined by Carl Jung and Sigmund Freud over the early and middle 20th century, and has continued to be used in psychology and philosophy.The Diagnostic and Statistical Manual of Mental Disorders (DSM) eliminated the neurosis category in 1980, because of a decision by its editors to provide descriptions of behavior rather than descriptions of hidden psychological mechanisms.