How Effective Is (More) Money? Randomizing Unconditional Cash Transfer Amounts in the US

165 Pages Posted: 18 Jul 2022

See all articles by Ania Jaroszewicz

Ania Jaroszewicz

Harvard University - Institute for Quantitative Social Sciences

Jon Jachimowicz

Harvard University - Organizational Behavior Unit

Oliver Hauser

University of Exeter Business School - Department of Economics

Julian Jamison

University of Exeter

Date Written: July 5, 2022

Abstract

We randomized over 5,000 US individuals in poverty to one of three conditions during the first year of the COVID-19 pandemic: receiving a one-time $500 unconditional cash transfer (UCT; half a month’s worth of total household income for the median participant; N=1,374), a $2,000 UCT (two months’ income; N=699), or nothing (N=3,170). We measured the effects of the UCTs on participants’ financial well-being, psychological well-being, cognitive capacity, and physical health through surveys administered one week, six weeks, and 15 weeks after cash receipt. For 43% of our sample, we also observe bank account balances and financial transactions. While the cash transfers increased expenditures for a few weeks, we find no evidence that they had positive impacts on our pre-specified survey outcomes at any time point. We further find no significant differences between the $500 and $2,000 groups. These findings stand in stark contrast to the (incentivized) predictions of both experts and a nationally representative sample of laypeople, who---depending on the treatment group, outcome, and time period---estimated treatment effect sizes of +0.16 to +0.65 SDs. We test several explanations for these unexpected results, including via two survey experiments embedded in our trial. The data are most consistent with the notion that receiving some but not enough money made participants’ needs---and the gap between their resources and needs---more salient, which in turn generated feelings of distress.

Keywords: Cash Transfers, Poverty, Welfare, Behavioral, Household Finance, Field Experiments

JEL Classification: C93, D91, G50, I30

Suggested Citation

Jaroszewicz, Ania and Jachimowicz, Jon and Hauser, Oliver and Jamison, Julian, How Effective Is (More) Money? Randomizing Unconditional Cash Transfer Amounts in the US (July 5, 2022). Available at SSRN: https://ssrn.com/abstract=4154000 or http://dx.doi.org/10.2139/ssrn.4154000

Ania Jaroszewicz (Contact Author)

Harvard University - Institute for Quantitative Social Sciences ( email )

1737 Cambridge St
Cambridge, MA 02115
United States

Jon Jachimowicz

Harvard University - Organizational Behavior Unit ( email )

Soldiers Field
Boston, MA 02163
United States

Oliver Hauser

University of Exeter Business School - Department of Economics ( email )

Streatham Court
Exeter, EX4 4RJ
United Kingdom

HOME PAGE: http://www.oliverhauser.org

Julian Jamison

University of Exeter ( email )

Northcote House
The Queen's Drive
Exeter, EX4 4QJ
United Kingdom

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