Thread by @jonj

🚨 New WP 🚨 In late 2020 we gave 5,000 low-income US participants $2000, $500, or nothing ($2.5m in transfers), measured survey outcomes, & (for 43%) have access to bank info. What did we find? 1/ (w/ @AniaJaroszewicz, @julianjamison, & Oliver Hauser)

🔓papers.ssrn.com/sol3/papers.cf…

What would you expect we'd find? We asked experts & a representative US sample to predict results, including many of you #onhere! 2/

https://twitter.com/jonj/status/1328368911071531009

In the prediction study, we find that both experts and laypeople expected $500 to outperform nothing, $2000 to outperform $500, & effects to be largest immediately after receipt with sharp decays (prediction range: .16-.65 SD, depending on time/condition/outcome) 3/

Our actual results: First, in bank account data, both $500 & $2000 cash transfers enabled consumption but were spent quickly. Within 4 weeks, we see no sig difference in bank balances between either cash & control groups. 4/

What did participants spend money on? In bank account & self-reported data, we find people spend money on eg bills, food/drink, shops, transportation. People had many needs and spent the cash to do their best to address them. 5/

Turning to SURVEY outcomes (financial and psychological well-being, cognitive capacity, health), here comes the big (& based on prediction study, surprising) takeaway: We find NO positive effect of cash—if anything, in some prespecified analyses, we even see negative effects. 6/

We also find no differences between the $500 and $2000 groups. We stress-tested these two results through a large number of additional analyses but they are both very robust. 7/

In further inspecting this, we categorized survey outcomes into more "objective" and more "subjective" outcomes, and find that the negative effects were concentrated among the "subjective" outcomes, whereas for "objective" outcomes the treatment effects are mostly null. 8/

As you can imagine, this raised a LOT of questions to understand WHY these negative outcomes emerged in ppl receiving cash transfers. In the paper we test (& rule out) seven different possible mechanisms, in part through additional experiments embedded in our data collection. 9/

Our evidence points toward the cash transfers being largely insufficient in resolving participants' needs; and that instead, receiving cash transfers made their needs MORE apparent to them in ways that were overwhelming, causing the distress we see in our survey outcomes. 10/

For example, cash groups reported feeling more stressed about how to spend their (limited) resources, more burdened by the needs of people outside their household, and were more likely to think about money-related concerns. 11/

More narrowly, this paper—as one of the first high-powered experiments on the effects of unconditional cash transfers in the US—provides important insights into the design of cash transfer and poverty alleviation programs. (But remember COVID may have also played a role.) 12/

Cash transfers in low-income countries are often successful & less is known for high-income countries. Clearly, cash helps consumption in both settings but just doesn't stretch as far in high-income countries. Getting amount right & additional support ("cash+") seems key 13/

More broadly, this work fits into psychology of poverty/scarcity literature; receiving some but insufficient resources may not necessarily relieve experienced scarcity, but instead only serve to exacerbate it as people become more aware of all the needs they cannot address. 14/

I hope you read the paper and accompanying (lengthy!) appendix—it was an insane amount of work, and we went as deep as possible to make sure we got this right (especially given the importance and potential policy implications of this research). 15/

Link: papers.ssrn.com/sol3/papers.cf…

Thank you for reading this far! If you have thoughts/feedback/questions you'd like us to delve deeper into, please don't hesitate to let us/me know. We'd love to hear from you to make this paper better and more useful for you! 16/16