A recent study put to the test an idea that has become increasingly influential over the past decade: To help kids thrive, one of the best things you can do is to give their parents cash with no strings attached.
This idea was the impetus in 2021 for the one-year replacement of the existing Child Tax Credit—which generally goes only to working parents—with a child allowance that provided up to $3,600 annually per child and was delivered as a monthly check regardless of whether parents work. Congress came up one vote short in the Senate from extending the child allowance into future years, and Democrats ever since have made bringing back the policy a top priority.
So what did the new study find about the effects of a child allowance? It didn’t boost kids’ development. The study provided $4,000 per year without conditions to a random selection of families from the time their child was born, and monitored the children’s outcomes for four years while receiving the payments. Across an array of cognitive tests, the kids receiving the generous child allowance scored no better than kids who did not receive it.
The results of the study apparently came as a surprise to its authors and others who have previously supported a child allowance. Jason DeParle in the New York Times this week wrote:
Significant but indirect evidence has suggested that unconditional cash aid would help children flourish. But now a rigorous experiment, in a more direct test, found that years of monthly payments did nothing to boost children’s well-being, a result that defied researchers’ predictions and could weaken the case for income guarantees.
The results should not have come as a surprise.
There is indeed a substantial body of evidence that more income is good for kids—it can improve their academic performance in the short run and their outcomes as adults in the long run. But there is an important caveat: Whether there are strings attached to the income makes a difference. Income assistance that requires work, in the form of the Earned Income Tax Credit (EITC), has shown the strongest evidence of boosting kids’ development. The evidence for support not tied to work is generally weaker or relies on evidence from over half a century ago through the rollout of Food Stamps and other programs when baseline material wellbeing was far lower.
The importance of conditioning assistance on work has previously been recognized. In a widely cited 2016 volume for the National Bureau of Economic Research, Austin Nichols and Jesse Rothstein conclude, “there is robust evidence of quite large effects of the EITC on children’s academic achievement and attainment,” compared to “relatively small estimates of effects of family income on student outcomes that come from non-EITC settings.” Likewise, a 2014 article published in the Quarterly Journal of Economics posits that housing assistance does little to improve child outcomes compared to the EITC because the EITC promotes work and leads kids to spend more time in child care. I previously noted in a 2022 Senate testimony: “Government programs that provide aid to low-income families without encouraging work appear to be a less robust mechanism for improving long-run child outcomes.”
Though it should not come as a surprise, the null result in the Baby’s First Years study was not a forgone conclusion nor was the study unwarranted. To the contrary, the study was essential to provide a direct and highly rigorous test of an increasingly popular policy idea that has a decent chance of being revived by policymakers in the future. Additional studies of the same rigor as Baby’s First Years should be encouraged.
A major caveat of the Baby’s First Years study is that it took place during the COVID-19 pandemic, which as the authors note, was accompanied by unprecedented income support policies that may have diminished the importance of the study’s payments. Results could very well differ when conducted during more normal times. But any new study should be taken on with clear eyes about the pre-existing evidence regarding the link between the positive effects of income and conditioning on work.
Even as we gather much needed additional evidence, policymakers require a comprehensive and nuanced understanding of the likely effects of new policies based on what we already know. Replacing the Child Tax Credit—which like the EITC requires work and thus is likely to improve children’s outcomes—with an unconditional child allowance with no such track record of success, could very well hurt kids’ development. Supporters of a child allowance need to take that risk seriously, especially if their ultimate goal is to help children thrive.