Last week, GOP presidential hopeful Jeb Bush pledged to lift up America’s poor by providing them with “hope and aspiration,” rather than seducing them into greater dependency with “free stuff.” In Bush’s view, giving unearned financial assistance to low-income households doesn’t merely burden the taxpayer — it also exacerbates the very poverty it seeks to relieve. By providing unearned relief in the short term, “government handouts” hurt the poor in the long term by inhibiting their “hopes and aspirations” for self-sufficiency, the former Florida governor explained.
This idea is a foundational premise of the Republican Party’s economic philosophy, and it has a certain intuitive appeal: “Give a man a fish and you feed him for a day,” goes the old proverb. “Teach a man to fish and you feed him for a lifetime.” But if that man can’t learn to fish, what happens to his children? A new study from the National Bureau of Economic Research led by Randall Akee of UCLA’s Luskin School of Public Affairs suggests that, far from inhibiting the aspirations of impoverished children, government handouts may play a vital role in fostering their realization.
There have been plenty of studies showing that investment in early childhood education can improve impoverished children’s emotional and behavioral health, and thus their later-life outcomes. But the NBER researchers wanted to see whether similar results could be achieved simply through subsidizing the income of poor families rather than via directed subsidies for food, education, and so forth.
Finding the appropriate conditions for such a study wasn’t easy. At present, the U.S. government distributes welfare spending almost exclusively through targeted programs rather than direct cash transfers. Generally, if an American family experiences an increase in overall income, it’s the product of improved employment conditions for one or both parents. But the researchers found a perfect exception to this rule on a North Carolinian Native American reservation in the Great Smoky Mountains.
Back in the early 1990s, each adult member of the reservation started receiving annual payments of $4,000 as part of an agreement to build a casino on tribal land. Before the payments began, the average income of the eligible families was $22,145. To isolate the effect of this unearned income on adolescent development, the researchers divided the reservation’s children into two groups — those who were younger than 16 when their families began receiving payments, and those who were that age or older — and then tracked their emotional and behavioral health over time through a variety of measures. (The researchers also included control groups of non–Native American families to make sure there weren’t broader trends in the area that could account for any changes they observed.)
The resultant number-crunching was a bit complicated, but the key takeaway, as the researchers put it, is that “[t]he overall effect of an increase in unearned household income is an improvement in child personality traits by age 16. The results also indicate that there is a reduction in behavioral and emotional disorders.” Specifically, kids whose parents received the casino payments from the start of adolescence made far greater gains in the personality traits of “agreeableness” and “conscientiousness” than those who did not. What’s more, the positive effects were most pronounced in children who had lagged behind their peers before the casino was built. And these benefits appear to have improved the children’s later-life outcomes: When researchers reconnected with the subjects at age 25, those who benefited from the “gambling handouts” early in adolescence had, in the aggregate, attained a higher level of education and were more likely to hold a full-time job as compared to those whose families’ benefits kicked in after age 16.
The durability of these effects is important when thinking about cash transfers to the poor as a form of government investment. If providing a low-income family with a small income subsidy improves their children’s prospects for employment and emotional health later in life, then doing so may actually prove a cost-saving measure in the long term. This is especially plausible when one considers that adolescent emotional disorders not only correlate with later-life unemployment, but also criminality. The families in the study received a mere $4,000 a year. The annual cost of jailing a single prisoner in the U.S. can run as high as $40,000.
Ironically, this study suggests that “free stuff” produces improved outcomes by fostering the very “family values” that Republicans like Bush often champion as poverty’s panacea. The authors note that greater family income has been shown to correlate with decreased marital stress and increased parental involvement and supervision. Families that received casino payments reported significantly better parent-child relationships than those who did not. Give a man some unearned income, in other words, and he’ll have time to teach his son to fish.
Eric Levitz can be followed on Twitter at @ericlevitz.