Giving people money helped less than I thought it would

Ending the war on poverty will take more than cash transfers

U.S. singer Eartha Kitt is seen at the end of the Poor People March, on June 19, 1968, in Washington, D.C. (Photo by ARNOLD SACHS/AFP via Getty Images)

Just give people money. It's the simple, brute-force solution to so many problems. In low-income countries, charities are sometimes measured against whether their interventions are better than simply giving people cash. Even in high-income countries like the U.S., when disaster strikes, often the best thing you can do is get money into the hands of affected people immediately. They know whether they should use it to buy gas, rent an Airbnb or fly to their cousin's house one state over.

So it wasn't that crazy to assume — particularly once promising pilots were released — that the same should be true for addressing chronic poverty in high-income countries. If you give a new mom a few hundred dollars a month or a homeless man one thousand dollars a month, that's gotta show up in the data, right?

Alas.

A few years back we got really serious about studying cash transfers, and rigorous research began in cities all across America. Some programs targeted the homeless, some new mothers and some families living beneath the poverty line. The goal was to figure out whether sizable monthly payments help people lead better lives, get better educations and jobs, care more for their children and achieve better health outcomes.

Many of the studies are still ongoing, but, at this point, the results aren’t “uncertain.” They’re pretty consistent and very weird. Multiple large, high-quality randomized studies are finding that guaranteed income transfers do not appear to produce sustained improvements in mental health, stress levels, physical health, child development outcomes or employment. Treated participants do work a little less, but shockingly, this doesn’t correspond with either lower stress levels or higher overall reported life satisfaction.

Homeless people, new mothers and low-income Americans all over the country received thousands of dollars. And it's practically invisible in the data. On so many important metrics, these people are statistically indistinguishable from those who did not receive this aid.

I cannot stress how shocking I find this and I want to be clear that this is not “we got some weak counterevidence.” These are careful, well-conducted studies. They are large enough to rule out even small positive effects and they are all very similar. This is an amount of evidence that in almost any other context we’d consider definitive. And yet, you'd be hard-pressed to hear about it in the media:

“Overall, the larger and more credible studies in this space have tended to find worse effects, and yet the press seems to prefer to cover the small pilots that show positive impacts,” Eva Vivalt, a co-author of one recent OpenResearch study on guaranteed income in the U.S., told me.

The war on poverty is the unfinished business of American liberalism. No randomized controlled trial is really going to convince me that money does not improve people's lives. But I do think cash as an intervention is best used in emergencies, for pregnant women, domestic violence victims or in other, narrower, contexts where study is still ongoing. It is not going to deliver significant changes for chronic poverty. Winning the war on poverty will require more than just transfers, it will require building and improving institutions that provide education, health care and housing. It's harder this way, but in the words of John Maynard Keynes, “Anything we can do, we can afford."

The evidence: What do the basic income studies really show?

First, some good news: Poor Americans do not fritter away the cash on "vice goods," like drugs, alcohol or gambling, and the best piece of news is that in qualitative interviews — when you ask people how they’re doing and what they did with the money — the recipients give very moving accounts. The money brought comfort, security, hope and steps toward a better future — just like you’d expect.

But if you were hoping that monthly transfers of a few hundred to a thousand dollars could transform the war on poverty, then I think the results are fairly clear at this point: Cash isn't king.

The gold standard for a guaranteed income experiment goes something like this: Researchers recruit a large population — thousands of people, often across multiple cities — and split them into experimental and control groups. (Sometimes the control group gets a smaller sum of money, $20 or $50 a month, rather than getting nothing.) Researchers arrange to protect other benefits, so no one loses eligibility for Medicaid, Supplemental Nutrition Assistance Program (SNAP) or other programs. (Losing eligibility for other benefits would make it much harder to usefully test the effects of cash.) Well-designed studies typically preregister what they’ll study so that they can’t p-hack their way to results after the fact.¹

The team behind Baby’s First Years, one study of a guaranteed income program for new mothers with an emphasis on the effects it would have on mothers and on child development, gave their control group $20 per month and their experimental group $333 per month. They recruited low-income mothers at the hospitals where they gave birth, running the study in Omaha, Nebraska; New York; New Orleans and the Twin Cities. The experimental group had more money (as you would expect) and worked a little less (but it’s probably good if mothers of young babies can cut back on hours slightly). They also spent slightly more money on stuff for their kids.

But there was not much else. The cash transfers did not improve maternal health outcomes or child health outcomes. They had no effect on stress, depression, body mass index, how often children got sick or the children’s overall health. They did not improve mothers’ self-reported relationship quality or measures of psychological distress. There was no effect on child development.

“I was very surprised — we were all very surprised,” UC Irvine economist Greg Duncan, one of the study authors, told The New York Times. “The money did not make a difference.”

But maybe, it just takes a lot more cash. “$333 a month in a time of inflation, a historic pandemic … that's just not going to go very far,” Amy Castro, faculty director of the University of Pennsylvania Center for Guaranteed Income Research, observed to me.

On some level, she has to be right. As an area gets richer, people’s life outcomes get systematically better. But it matters quite a lot how much money it takes to see meaningful improvements.

A Compton, California, RCT tried $500 per month for two years. They found “no significant effects of the transfers on labor supply; assets; psychological well-being; financial security; or food insecurity.” The biggest effect they found was on other income sources: The groups receiving transfers worked fewer hours or got paid less than people in the control group. The lost nontransfer income averaged $333 a month.

Now, I think the working poor having more free time is a good outcome. Except that the participants were asked to rate their own psychological well-being … and nothing changed.

OK, well let's double it.

The OpenResearch unconditional income study tried $1,000 per month for three years, while the control group got $50 per month. They found that participants worked less — but nothing else improved. Not their health, not their sleep, not their jobs, not their education, and not even time spent with their children. They did experience a reduction in stress at the start of the study, but it quickly went away.

“I was surprised at how little we found that looked great,” Sarah Miller, one of the study authors, told me.

I want to pause for a moment and note how weird this is. Most studies on the relationship between income and well-being in the U.S. find that increases in income predict increases in well-being. Research from the earned income tax expansion in 1993 found that the extra cash improved stress and maternal health. Direct cash payments not making people better off is a surprising finding — and while Baby’s First Years and Compton are relatively small sums of money, OpenResearch is larger.²

None of the researchers I spoke with believed that giving people money actually makes them no better off. “I can't really believe that more income is worse,” Miller told me. “That would mean that recessions are good. We know their consumption went up. A lot of times that’s a fundamental measure of well-being.”

But then, what’s going on?

I scoured these reports for answers. Where was the money going? People weren't blowing it all on “vices” like gambling, tobacco or alcohol. It’s generally proportionate to overall spending, so: lots on housing and transportation, some on food and child care. The Compton study found that people paid down their debt some. There’s no obvious single pain point for these families.

Maybe this isn’t as confusing as it initially feels. If you gave me an extra 10% of my income to spend, it would absolutely make me better off — just not necessarily in ways you could measure.

I might give some to friends going through a time of need, which makes my community stronger even if it doesn’t show up in a study looking at my habits. I might take the kids across the country to visit my aging grandparents — stressful, but worth it in a way that probably doesn’t show up on a mental health inventory.

“It's very hard to evaluate something like cash,” Miller told me. “You might spend it on a new car and I might spend it on a vacation and someone else might spend it on their kids and when you average that all together it's hard to find anything.” No study with this setup can demonstrate conclusively that money didn’t help someone.

But they can — and did — demonstrate that giving low-income people money in this format does not advance other policy priorities. It will not (at any detectable scale) make them measurably healthier or happier, or get them better jobs, or improve their children’s intellectual development. Certainly not if it’s a big “give everyone cash” program — researchers did point out to me that some much more narrowly targeted cash programs that are currently underway were pulling their weight.

The basic income cover-up: death by a thousand press releases

These latest small-to-null results largely weren’t surprising to people who watch this issue closely. Many of them had realized years ago, when the first such studies came out, that the effects of cash weren’t going to be transformative.

While exciting big results from pilots tend to make headlines and travel quickly on social media, sobering results from RCTs generally don’t.

The depressing facts I've recounted for you are largely missing, obscured or glossed over in the public communications about these studies. Articles focus on tiny positives or, at best, will note the evidence is uncertain. Very few articles or press releases put the big picture together even if they cover one disappointing result.

Perhaps the most egregious offender is the Denver Basic Income Project — the most bizarre set of findings I reviewed. This is what a prominent part of the report section of their website looks like:

"All payment groups showed significant improvements in housing outcomes, including a remarkable increase in home rent and ownership, and decrease in nights spent unsheltered.”

I guess I can't call this a lie per se, but in reality they gave $1,000 a month to homeless people and they were barely more likely than the control group to get housing.³

Time for some media criticism; It's not just the researchers' fault. Even when researchers don’t understate a null or negative result, they told me that journalists are often less eager to go to press with it. “[Researchers have] written a dozen null effect papers, they’re trying to get the result out there,” Miller told me. “People aren’t interested in reading [them].”

One researcher said that the university press office seemed to lose interest in a press release about their paper once they learned it was a null result, saying that publication could affect support for public assistance programs. (The researcher was unimpressed. The press release did eventually go out.)

It's easy to say a bunch of true things, yet leave your reader less informed. And even if a study gets covered, there are several different ways to write the same take. When covering Baby’s First Years, you can highlight the fact that mothers felt more confident about parenting, or you can show the disappointing results on child development metrics.

In some ways, the way that we identify promising anti-poverty programs is itself setting us up for failure. Local governments, multiple researchers told me, will often only really get excited about a program if they’ve seen eye-popping results from a pilot program elsewhere. They want a silver bullet.

Many of the people working on guaranteed income chafe at the fact that their programs can be criticized for not measuring up, precisely because they conducted high-quality studies in the first place! “When we look at every other anti-poverty regulation, we don't test it with this level of rigor,” Castro pointed out to me.

It is true that it would have been impossible for me to write an article about whether high-quality randomized studies found SNAP had benefits for food insecurity even if I wanted to, because we didn’t do RCTs when we introduced SNAP.⁴

The standards are higher for guaranteed income than they were for most anti-poverty measures when they were introduced. But increasing rigor is a good thing. It can allow us to shift focus from programs that don’t seem to move the needle toward ones that do.

“There is a menu of cash options we should be looking at,” Stacia West, director of the Center for Guaranteed Income Research, told me. “There's cash writ large, and then there are targeted life events.”

Among the many studies still underway, there are much more specific and targeted cash programs — say, aimed at pregnant women, people just leaving prison or those recovering from a major negative life shock — that look promising. If we hesitate to say what works and what doesn’t, money will be wasted on things that don’t work: money that could have gone where it would make a difference.

I am excited to see whether BIG:LEAP’s finding that cash can help victims of domestic violence is reproduced in upcoming work. I’m excited to see the results of cash for pregnant women to improve pregnancy outcomes, cash for parolees to prevent recidivism and cash in response to major shocks and life events.

I hope that some of those deliver on their early promise and help us advance the project of addressing poverty. But whatever the results are, we should not bury or exaggerate them.

We're in a dangerous epistemic environment. One where widespread agreement on basic facts is scarce and noble lies have permeated the halls of truth-seeking organizations like the media. Those of us who care about ending poverty have to choose the integrity of our work over trying to play 5D chess and hoping no one else knows the rules.

1. If you look through a hundred outcomes, you’ll definitely find some that improved just by chance. Cherry picking these is a bad scientific practice known as “p-hacking” — and with basic income, there are far more than a hundred possible outcomes to check.

2. Not every large RCT has found only null results. BIG:LEAP, in Los Angeles, gave out $1,000 a month for one year and found a reduction in intimate partner violence at the 18 month endpoint among those who had experienced it in the past. But the overall population of BIG:LEAP recipients weren’t overall better off — measures of psychological distress were actually worse in the treatment group at 12 and at 18 months.

3. 43% of the control group (that got $50 per month) found housing by the end of the study, 44% of the experimental group (that got $1000 per month) found housing by the end of the study and 48% of the other experimental group (that got a $6,500 lump sum and then $500 per month) found housing by the end of the study. So basically, people found housing at the same rate regardless of whether they were given $50, $1000 or $500 (plus a massive lump sum).

4. What you can do, of course, is look at the effects of SNAP expansions or cutbacks — which make it clear the program does have direct and immediate impacts on its target policy metrics.