DEE WILSON CONSULTING

By Dee Wilson

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After reading David Brooks' article questioning the effectiveness of cash grants to low income families in the Sept. 5 New York Times and Kelsey Piper's article, "Giving people money  helped less than I thought it would," in The Argument, (available online), I decided to read three articles they cite:

• "Household Responses to Guaranteed Income: "Experimental Evidence from Compton, California," by S. Balakishnan, et al, from the National Bureau of Economic Resources (NBER);
   

• "The Employment Effects of a Guaranteed Income," by Vivalt, et al ( 2024), from NBER; and
   

• "Cash Transfers and Their Effect on Maternal and Young Children's Health: A Randomized Controlled Trial," by Duncan, et al in JAMA Pediatrics (published online June 16, 2025)

 

Brooks and Piper cite the first two studies to counter the argument in the Duncan article that the monthly cash transfer of $333 was too low to make a positive difference on low income families' lives.

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The Compton, California study referred to a the "Compton Pledge" had a $442 per month cash grant ($450 for 'intent to treat' analyses) in the experimental group, though Piper asserts the cash benefit was $500 per month suggesting (to me) that he did not read the study carefully. The Vivalt, et al, study, the Open Research Unconditional Income Study (ORUS), was conducted in Illinois and in North Central Texas and Dallas, Tx., and included a monthly cash grant of $1000 for three years. Both the Compton Pledge and ORUS were randomized controlled trials that began during the late fall of 2020 at the height of the pandemic during a time of economic hardship and public stimulus checks.  The Baby's First Years (BFY) study discussed by Duncan, et al, began in 2018 and continued during the  pandemic. How and to what extent the isolation of families and the receipt of public stimulus checks during the pandemic may have influenced outcomes of cash grants to low income families is uncertain. There is a possibility that the impact on family income and on psychological well being was large. However, researchers who conducted these studies were caught by surprise when the pandemic occurred, and either did not attempt to ascertain its effects on income or family functioning, or in the BFY study compared data gathered pre and post pandemic.   

 

The study of the Compton Pledge (which I have attached below) is a model of scholarly objectivity and discernment, which the ORUS study is not.  Balakishnan, et al, have provided an outstanding summary in their Introduction of mixed findings from many U.S. and Canadian studies regarding the effects of cash grants in low income families.  I urge anyone interested in this subject to read their discussion of research re effects of cash grants on low income family functioning.  It's only a few pages in length. They have also written a clear and nuanced discussion of results, which are not all of a piece. In doing so, they shed light on why studies of cash grants to low income families have produced such mixed findings: 

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Income eligibility 
 

Studies of cash grants have markedly different eligibility requirements. The Compton Pledge accepted families whose income was 220% of the federal poverty line( FPL), while ORUS eligibility limit was 300% of FPL. According to Balakishnan, et al, almost a quarter of cash grant recipients in ORUS had incomes 200% or more above FPL, while only a third had incomes below FPL. Fifty seven percent of Compton Pledge recipients had an annual income below FPL. Therefore, when Brooks, Piper and others make assertions about the negligible effects of cash grants on low income families based on studies that include a large percentage of families with incomes well above the FPL,  their comments have questionable applicability to poor and severely poor families as defined by the FPL.    

     

Benefits and outcomes of interest  

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Researchers who design studies of cash grants have widely varying interests. Some studies are primarily interested in labor force participation, consumption patterns, drug and alcohol and tobacco use, financial and housing security, and psychological well being, while others are interested in parenting, adult and child health and mental health, child development, education, etc. The Compton Pledge was interested in rates of  domestic violence, as well as family income, labor force participation, consumption patterns, financial security, housing security, psychological well being and health.  Neither the Compton Pledge or ORUS were studies of parenting, child development or child welfare involvement. In the ORUS study, slightly more than half of recipients had children, while about    three quarters of recipients in the Compton Pledge had at least one child in the home. 

The impact of debt 

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Balakishnan, et al, comment that the impact of cash grants on consumption patterns in the U.S. appear to be affected by the debt of families at baseline. In the Compton Pledge study, recipients of the cash grant had an average credit card debt of about $4000 and total debt at the end of the study of about $19,000. Recipients of cash grants in this study decreased consumption by a modest amount, probably because they used additional funds to reduce credit card debt. Reduction of debt contributed to increased housing security, according to the authors, one of the major benefits to families    found in the study.    

The framing of findings may be in indication of bias 
 

The authors of the ORUS study dismiss the finding that the $1000 monthly cash grant led to improved psychological well being during the year and continued to a lesser statistically insignificant extent in year 2 before vanishing in the third year, on the grounds that the improvement in psychological well being of recipients was temporary. The authors even tout their research design which followed families receiving the cash grant for three years. which revealed the lack of a lasting effect of the cash grant on psychological well being.  Imagine a study of salary increases which finds large beneficial effects on self reported psychological well being for a year, much smaller effects for a second year and no effects on self reported well being in the third year, and concludes that the effect of salary increases on well being were negligible. It is likely that most increases in income of whatever level have time limited effects on psychological well being, thus the truism that "money can't buy happiness." Any cash grant to low income families that has marked positive effects on recipients' mood and morale for 1-2 years has achieved something remarkable. For this reason, I strongly differ with the ORUS researchers' framing of their findings. 

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Some studies have mixed findings that do not support a "thumbs up"  or "thumbs down" opinion re cash grants    

The Compton Pledge study has an exceedingly interesting set of findings that do not support the use that Brooks and Piper have made of them in their recent articles. Two thirds of the recipients of the Compton Pledge were Hispanic and about one quarter were Black. In this study, a cash grant of $442 per month led to lower labor force participation, especially among part time workers, reduced consumption, led to a modest reduction of credit card debt, effected no change in psychological well being or in financial security when recipients are considered as a whole, and found no improvement in food insecurity.  Recipients of cash grants reported statistically significant improvements in housing security that included less perceived risk of eviction, a much lower rate of domestic violence as indicated indirectly by "list questions" used to mitigate social desirability bias and improved sense of financial security among women, especially single mothers, a little over one-fifth of recipients.  Single mothers increased their working hours by almost ten hours per week and as a result increased their incomes. One of the major findings of the study was that cash grants had much larger effects on the financial security of women compared to men. Another important finding was that giving the cash grant to the man in the family had a large effect in reducing the likelihood of domestic violence. In my judgment, these are major positive outcomes in a study that gave recipients a cash grant of about $5,300 annually.    

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The ORUS Study    

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This study randomized selection of 1000 participants who received monthly cash grants of $1000 for three years and 2000 participants in the control group who were reimbursed for completing surveys. Participants lived in Dallas, Waco or other areas of North Texas, while participants in Illinois lived in Rockford or Chicago. The main goal of the study was to test the effect of a large cash grant  on labor force participation and family income, as well as job mobility, job search, quality of employment and psychological well being.  Participants' average income was $29,900 at baseline; the cash  grant increased family income by an average of 40%. 

    

The study's main findings were that recipients of cash grants had reduced average family incomes of $4200 per year and reduction of individual incomes of $2300 per year due to working less hours and longer periods of unemployment, i.e., lots of job search but more selective behavior in accepting employment.  The negative effects on employment and income were much greater for young people in their 20's, among families who had no children and participants who lived in Texas, though the authors do not clearly articulate state differences in their discussion ( see Appendix 33). These findings, as the authors comment, are consistent with the hypothesis that participants in their 20s who lacked parenting responsibilities often used the cash grants to quit low wage jobs and pursue educational opportunities, whereas in the Compton Pledge study participants were more likely to use the cash grant to reduce debt. Why is this outcome viewed as negative and as evidence that the  cash grants made no positive difference in low income families lives?  The study also found an increased interest in entrepreneurial interests and ambition, but no increase in entrepreneurial activity, another indication of its likely impact on the educational aspirations of younger participants.  

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Cash grants had far greater negative effect on employment and income in Texas, a state with a lower minimum wage and lower cost of living than in Illinois. It appears that many young participants who received cash grants in Texas refused to work jobs paying "dirt poor"  wages and chose to return to school, a positive outcome in my view.     
 

The Baby's First Years study

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When I first read this study in JAMA during the summer, I gave little importance to the study's findings of no effect of monthly cash grants of $333 for four years, beginning in 2018, on mothers' health or mental health and on children's health outcomes. Clearly, I thought, a cash grant of about $4000 per year was too small to make a difference in the urban areas where the study was conducted, Omaha, Neb., Minneapolis/St. Paul, New Orleans and New York City.  However, on rereading the study I do not believe its negative findings can be dismissed so easily. Furthermore, because this study was advertised as the first randomized controlled trial in the U.S. regarding the effects of cash grants to low income parents on children's developmental outcomes, it is sure to receive much attention and discussion for years to come. 

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The BFY study randomly selected 400 low income mothers to receive a monthly cash grant of $333 and 600 mothers to receive $20 per month, beginning at their child's birth.  882 mother/child dyads were included in the study, initially planned to last four years but later extended to six years. The cash grants increased mothers' income in the experimental group by 18%. This study examined outcomes on maternal mental health and children's health as reported by mothers when the children were four years old. This study was designed and implemented by highly esteemed poverty researchers who expected to find positive effects of additional income on children's health and development. However, there was nothing mixed or nuanced about their findings, which showed no effect of the cash grant on mother's depression, anxiety, stress level, experience of material  hardship, change in residential neighborhoods, dietary practices or body mass index ( BMI) of either moths or children.  The authors speculate that the pandemic may have altered outcomes, but clearly doubt that this was the case, given that the data they gathered on outcomes of interest was much the same pre and post pandemic.

I was surprised that the authors did not compare recipients living in New York City from recipients in Omaha, Neb., as $4000 in New York City does not have the potential purchasing power of $4000 in  Omaha, Neb., St. Paul/ Minneapolis and New Orleans, but the largest deficiency of the study as reported in JAMA is the lack of information regarding the interpersonal dimensions of mothers' lives, e.g. single/married, socially isolated/socially supported, experiences of domestic violence, work history, etc.  Cash grants were received in some interpersonal context, which needs to be explored to understand the disappointing outcomes of this important study.    
 

I remember a period of time when advocates and scholars invested in family preservation services were unwilling to accept the validity of randomized controlled trials that found no benefit on entry into  care rates for crisis oriented family preservation services (FPS). It was difficult for many years to take a careful dispassionate approach to the findings of RCT's. Eventually, the explanations for findings of RCTs became widely understood ( i.e., children in control groups were often not at imminent risk of placement despite caseworkers' representations to the contrary; and crisis oriented services have little effect on chronically referring families), resulting in an understanding of the best uses of FPS and their inherent limitations.  When negative findings came to be viewed as an opportunity to achieve better understanding of service outcomes rather than an occasion for personal attacks on opponents, child welfare agencies' use of FPS services improved. The same will be true in coming to grips with the BFY study's findings.