Research has shown that children born into lower-income households typically have worse health, educational and career outcomes compared with children from higher income households. The question has long been how to best address these disparities.
One idea that’s been gaining a lot of traction recently is called unconditional cash transfers. These are programs that typically identify lower-income families and for some period of time give them certain amounts of cash – free and clear with no strings attached.
The idea is that with cash in hand, low-income folks can use the money to meet their most urgent needs, which in turn might help them get out of poverty or at least set up their kids for better futures.
These programs have been tested all across the country and in several cities around Texas, as well.
One program tested out in the Dallas area is the focus of a new white paper by OpenResearch, a nonprofit research organization. Elizabeth Rhodes is their research director and joined the Texas Standard to discuss their findings. Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: For this study, y’all looked at low-income folks in Illinois and Texas, I gather, and for three years, some of them received up to $1,000 a month, no strings attached. Where did this money come from, and who administered the cash payments?
Elizabeth Rhodes: The money itself for the cash transfers came from private donors. The research was funded by several foundations, including the National Institutes of Health, the National Science Foundation… But the program was administered by local nonprofit organizations, social service organizations in Texas and Illinois.
Why did y’all zero in on Texas for this study? Was there something distinctive about Texas you wanted to look into?
One of the things we were interested in is how the cash transfers interact with the existing social safety net. And for that, we wanted to look at states with different policy contexts.
So with the existing social safety net, Illinois has expanded Medicaid, it is more generous in some ways – Texas less so. So we were really selecting on the different policy and economic context.
So bottom line, what did you find? Was there a difference in how these cash payments worked and delivered on the promise in Texas versus Illinois?
We ended up not finding much of a difference in states. And overall, I would say, with the high level, people use cash.
I mean, one of the benefits of cash is it is flexible and allows people to meet their specific needs. And those are varied. I mean from the day that we called people to let them know that they would be getting $1,000, I heard hundreds of different specific needs in that moment.
But we didn’t find the overall treatment effects in terms of marquee outcomes like longer-term household income or changes in children’s behavioral or educational outcomes that perhaps we were hoping or hypothesizing to see.
That doesn’t mean that it didn’t benefit families. People benefited in different ways. But in terms of at the population level, moving the needle on some of these disparities in terms kids’ health and education, we did not find that.
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Let me ask you something because I know it’s a question that a lot of listeners have. What was the sort of the longitudinal guidepost here? How long did this study examine the impact?
We had a three-year study. So we had 3,000 people a total, 1,000 of them received $1,000 a month for three years. And we had a group of control participants who received $50 a month over the same period. And that allowed us to compare outcomes across those two groups.
And it is true, we started this… The first payments went out in the fall of 2020, which was the pandemic. We started enrolling people a year before. We weren’t expecting there to be a global pandemic in the middle of it. But we did our best given the global circumstances.
I was just reading in the New York Times – I don’t think this was the same study. It may have been a similar study. “Study may undercut the idea that cash payments to poor families help child development.” Was that a separate study from yours?
It was separate.
Now, that’s interesting because as the Times reported, “rigorous new research appears to show that monthly checks intended to help disadvantaged children did little for their well-being, adding a new element to a dispute over expanded government aid.”
Is there an emerging consensus here that this long-standing idea, unconditional cash transfers, is just not going to bear fruit? How do you see it?
So I see the research is clear in terms of we aren’t seeing these large average effects on child outcomes. And that is very important to acknowledge.
I think the question of what that actually tells us and what it doesn’t is where there’s more disagreement. I think people talk about, well, is it parents’ income? Is it the cash itself? Or is it other factors like the quality of schools or housing or neighborhoods or parents’ education? And I think it’s really difficult to disentangle all of that.
You know, all these systems are challenging and we’ve been grappling with how to address these disparities for a long time – many years. And if cash is fairly straightforward to give, it’s administratively a lot easier if you’re not tracking where it goes and there’s no strings attached. There’s a promise there that, you know, if you can begin to chip away at some of these disparities, that’s a really positive outcome.
I think the fact that it doesn’t, doesn’t mean that families don’t need more resources. It’s more what forms those resources take. How does it interact with the existing systems? We had participants who were excited, they had the money to then go get housing, but their credit score was too low to qualify or their income wasn’t three times the rent. And so then they had some money, but they weren’t actually able to move into better housing.
And so there’s all these other contextual factors. And so I think the question is not, “Do people need resources?” It’s “what form does that take?” And I don’t think we have the answer to that yet.
