Study may undercut idea that cash payments to poor families help with child development

NZ Herald

29-07-2025

They were no more likely to develop language skills, avoid behavioural problems or developmental delays, demonstrate executive function, or exhibit brain activity associated with cognitive development.
'I was very surprised — we were all very surprised,' said Greg Duncan, an economist at the University of California, Irvine, and one of six researchers who led the study, called Baby's First Years.
'The money did not make a difference.'
The findings could weaken the case for turning the United States child tax credit into an income guarantee, as Democrats did briefly four years ago in a pandemic-era effort to fight child poverty.
That effort, in 2021, provided most families with children monthly cheques of up to US$300 per child and helped push child poverty to a record low, though it did not receive the kind of rigorous evaluation of its developmental impacts the new study offers.
It lapsed after a year, and Democratic efforts to extend it failed amid unified Republican opposition. Many Democrats are pushing to bring it back.
While the new research may shape the debate over income guarantees, the leaders of the new study disagree among themselves about the relevance of the experiment's results.
Some think the pandemic, which erupted soon after the research began, may have skewed outcomes, both because it disrupted lives and triggered large government aid programmes that diluted the impact of the stipends provided by the study.
The payments from Baby's First Years were also much smaller, on a per-family basis, than those the Democrats propose.
Larger payments might have beneficial effects.
Since the test was unusual in targeting children in their earliest years, it is also possible that benefits will appear later, after they start school.
Still, the test was unusually comprehensive, and the lack of results provides conservative critics of cash guarantees an empirical talking point.
'It shows that money alone won't lead to better outcomes for children,' said Robert Doar, president of the conservative American Enterprise Institute, who supports imposing work rules on aid on the theory that working parents offer children role models.
The study did not test non-cash programmes such as food stamps or Medicaid, or subsidies tied to work. The results were reported earlier by NPR.
It has long been clear that children from affluent families exhibit stronger cognitive development and fewer behavioural problems, on average, than their low-income counterparts.
The question is whether their advantage comes from money itself or from related forces including parental health and education, neighbourhood influences or the likelihood of having two parents in the home.
A landmark study in 2019 from the National Academies of Science, Engineering and Medicine found that 'poverty itself causes negative child outcomes' and aid programmes often help.
Most of the evidence came from studies of non-cash benefits, such as food stamps or Medicaid, or the earned-income tax credit, a subsidy for parents with jobs.
Some of the studies were decades old, when the safety net was smaller and expansions might have had larger effects.
For a more precise test of cash guarantees, Baby's First Years raised about US$22 million from the National Institutes of Health and private foundations and recruited 1000 poor mothers with newborns in New York, New Orleans, greater Omaha, Nebraska, and Minneapolis-St. Paul. More than 80% were black or Latino, and most were unmarried.
After randomly dividing the parents, researchers gave one group $333 a month while the other got a nominal $20. Random-control testing is considered an especially rigorous form of evaluation.
The researchers specified in advance seven measures on which they thought children in high-cash families would outperform the others.
After four years they found no group differences on any of the yardsticks, which aimed for a comprehensive look at child development.
Children in the families getting the higher cash payments did no better on tests of vocabulary, executive function, preliteracy skills or spatial perception.
Their mothers did not rank them more highly on assessments of social and emotional behaviour. And they were no more likely than the children in the low-cash group to avoid chronic health conditions including asthma.
Mothers in the high-cash group did spend about 5% more time on learning and enrichment activities, such as reading or playing with their children.
They also spent about $68 a month more than the low-cash mothers on child-related goods, including toys, books, and clothing.
At the same time, the study found no support for two main criticisms of unconditional payments.
While critics have warned that parents might abuse the money, high-cash mothers spent negligible sums on alcohol and no more than low-cash mothers, according to self-reporting. They spent less on cigarettes.
Nor did they work less.
While opponents say income guarantees could erode the work ethic, mothers in the two groups showed no differences across four years in hours worked, wages earned or the likelihood of having jobs.
The high-cash mothers did prove less likely to work fulltime during the pandemic, which researchers considered positive — evidence that aid helps parents manage emergencies.
One puzzling outcome is that the payments failed to reduce mothers' stress, as researchers predicted.
On the contrary, mothers in the high-cash group reported higher levels of anxiety than their low-cash counterparts. It is possible they felt more pressure to excel as parents.
Contrary to predictions by researchers, children in both groups showed similar patterns of brain activity on the study's main neurological yardstick, an index of high-frequency brain activity, as measured by an electroencephalogram. High-frequency brain activity is often associated with cognitive development.
Though an earlier paper showed promising activity on a related neurological measure in the high-cash infants, that trend did not endure.
The new study detected 'some evidence' of other differences in neurological activity between the two groups of children, but its significance was unclear.
While researchers publicised the earlier, more promising results, the follow-up study was released quietly and has received little attention.
Several co-authors declined to comment on the results, saying that it was unclear why the payments had no effect and that the pattern could change as the children age.
'Anyone who tries to tell you they know what the data mean is just speculating,' Katherine Magnuson, a professor of social work at the University of Wisconsin-Madison, wrote in an email.
The payments continued for more than six years, and future analyses will examine the longer-range effect.
Arloc Sherman of the Centre on Budget and Policy Priorities, a supporter of income guarantees, said the results were affected by the pandemic and should be weighed against conflicting evidence.
'I don't think these results undermine the conclusion, from a large volume of studies, that income is important for children's health, education, and development,' he said.
Jane Waldfogel, a professor at Columbia University whose book Child Benefits: The Smart Investment for America's Future supports child-rearing subsidies, said the experimental payments were too small to have the predicted effect.
Because the aid was capped at $333 per family, not per child, she said, households received an average subsidy less than half of what Democrats offered in 2021 and typically propose.
'It just wasn't enough to reduce financial hardship and strain,' Waldfogel said.
The payments initially increased household income by 18%, but high inflation eroded their value.
Virtually all parents in both groups remained low-income throughout the four years, and they reported similar levels of hardships including evictions or utility cutoffs.
Robert Rector, an opponent of income guarantees at the Heritage Foundation, praised the rigour of the study and said it 'blows the arguments for unconditional cash aid out of the water'.
The results are unsurprising, he said, because the safety net already provides what he called large food, healthcare and wage subsidies, meaning few families face dire conditions and the extra stipends did little to differentiate the groups.
While the aid did not boost child development in measurable ways, it may still have enriched family life.
Some parents told researchers it let them buy children special gifts or share meaningful experiences, such as dining out or visiting a zoo. One proudly photographed the winter coat she bought her child.
'The mothers are certainly not saying this money doesn't matter,' said Sarah Halpern-Meekin, a sociologist at the University of Madison-Wisconsin, who oversaw parent interviews.
Michael R. Strain of the American Enterprise Institute said the study reinforced his doubts about cash aid, but he encouraged fellow conservatives not to make too much of it.
'It seems completely plausible to me that the pandemic overwhelmed an effect from the income,' he said.
Still, he noted that poor families faced problems as varied as bad schools, violent neighbourhoods, and a shortage of role models. 'Can US$300 a month address that?' he said. 'I don't know why it would.'
A single study may alter few minds, but it has changed one expert's thinking.
Duncan, a leading child poverty researcher, had been convinced by studies of Medicaid, food stamps and the earned-income tax credit that unconditional cash aid would improve children's outcomes.
The uniform new results have made him reconsider.
'There is strong evidence that these other safety net programmes reduce intergenerational poverty,' Duncan said.
'Our cash payments appear unlikely to follow suit. We've got to come to grips with that.'
This article originally appeared in The New York Times.
Written by: Jason DeParle
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