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

Research from the University of Michigan and other institutions has shown that guaranteed income programs do not appear to improve recipients’ health, but they remain an important tool to consider for reducing poverty.

The findings come from a study published by the Open Research Unconditional Income Study, which gave 1,000 adults $1,000 per month for three years. The randomized controlled trial looked at the impact of the cash transfer on recipients, including their overall health, employment outcomes, and how they spent the money.

The health impact study was led by Sarah Miller, an associate professor of business economics and public policy at the University of Michigan, who found that the cash only produced short-term (one year) improvements in stress and mental health, but had no effect on self-reported physical health.

It’s disappointing that the study didn’t find a long-term reduction in stress, Miller said, because stress may be one way that increased income can improve health.

“Right now, there’s a lot of energy in health policy focused on addressing the ‘social determinants of health,’ especially poverty,” Miller said. “Can cash transfers be a way to effectively reduce health disparities in a meaningful way? Looking at these results, it’s hard to say yes.”

But Miller notes that she and her colleagues have found an overall increase in visits to hospitals and dentists — an increase in medical care that could lead to better health in the long run.

Participants, recruited primarily by mail from various counties in Texas and Illinois, were asked if they were interested in a study for which they would receive at least $50 per month. Of the 14,000 respondents who consented, researchers selected 3,000 as a weighted random sample to ensure racial and income diversity.

All participants in the latter sample group were enrolled in a cash transfer program that gave them $50 per month, and 1,000 of them were randomly selected to receive $1,000 per month. The researchers concluded that the control group should continue to receive the smaller amount going forward, as this would make them more likely to participate in future studies.

In an employment study, Miller and his colleagues found that recipients on $1,000 a month worked about 1.4 hours less per week, on average. Miller said he doesn’t see this as a negative; he thinks time away from work is valuable to recipients and “a good way to spend the benefit money.”

Unsurprisingly, when it comes to spending, the survey showed that consumption on food, entertainment, transportation and housing also increased: Participants increased their spending in these areas by about $300 a month.

While the spending didn’t appear to improve health, it did provide financial flexibility and freedom. “That’s a feature of cash, not a drawback,” said Miller, who also co-authored the employment and spending study.

“If the policy goal is to improve health specifically, there are health-focused interventions that we know work, such as lowering health care costs, expanding insurance coverage and reducing barriers to starting a primary care relationship,” she said.

“I personally support expanding cash transfers and believe the United States should do more to alleviate poverty, but knowing what cash transfers can and cannot accomplish is important to make good policy decisions.”

Both studies National Bureau of Economic Research Working Paper Series.