Guaranteed income programs are unlikely to improve health, but are still a valuable tool for alleviating poverty

Research from the University of Michigan and others shows that guaranteed income programs do not appear to improve the health of recipients, but they are still an important tool for fighting poverty.

The findings come from research released by OpenResearch’s Unconditional Income Study, which gave 1,000 adults $1,000 a month for three years. The randomized controlled trial examined the effects of the cash transfers on recipients, including their overall health, employment outcomes and how they spent the money.

Sarah Miller, an associate professor of business economics and public policy at UM, led the health impact study. She said the money produced only short-term (one year) improvements in stress and mental health and no effect on physical health, as measured by self-reports.

It was disappointing that no long-term reduction in stress was seen, Miller said, because that could be one way in which more income improves health.

“There’s so much energy in health policy right now to address the ‘social determinants of health,’ and poverty in particular,” Miller said. “Could cash transfers be the way to reduce health disparities in a meaningful and effective way? It’s hard for me to look at these results and say yes.”

However, Miller notes that she and her colleagues found an overall increase in visits to hospitals and dentists. It’s possible that increased medical care could improve long-term health.

Participants, who were recruited primarily by mail in a diverse set of counties in Texas and Illinois, were asked if they would be interested in a study in which they would receive at least $50 per month. Of the 14,000 respondents who gave consent, researchers drew a weighted random sample of 3,000 to ensure diversity in race and income.

All participants in the final sample group were enrolled in a $50 monthly cash transfer program, and 1,000 of them were randomly selected to receive $1,000 per month. Researchers reasoned that the control group should continue to receive the smaller amount so that they would be more likely to participate in future studies.

In the work-related study, Miller and colleagues found that recipients of $1,000 a month worked an average of about 1.4 hours less per week. She said she doesn’t see that as a negative: Time away from work is something they value, and she sees it as a “reasonable thing to spend the payment on.”

Not surprisingly, the study also showed an increase in food, leisure, transportation, and housing consumption when it came to spending. Participants increased their spending in those areas by about $300 per month.

While these expenditures didn’t appear to improve health, they did provide financial flexibility and freedom — “a hallmark of cash, not a bug,” said Miller, who also co-authored the employment and spending studies.

“If the policy is specifically aimed at improving health, then there are health-focused interventions that we know work: make medical care cheaper, expand coverage, and lower the barriers to engaging with primary care,” she said.

“I personally support more remittances and believe the US should do more to alleviate poverty. However, it is important to understand what remittances can and cannot accomplish so we can make sound policy decisions.”

Both studies can be found in the National Bureau of Economic Research Working Paper Series.