Lisa Gennetian On The Landscape Of Direct Cash Aid Programs

Siers-Poisson [00:00:07] Hello, and thanks for joining us for the Poverty Research and Policy podcast from the Institute for Research on Poverty at the University of Wisconsin-Madison. I’m Judith Siers-Poisson. For this episode, Dr. Lisa Gennetian joins us to discuss the landscape of direct cash aid programs in the United States and how they fit into a global context. We’ll be drawing on her recent co-authored paper titled, “Unconditional Cash Transfers for Families with Children in the US: A Scoping Review.” You can find a link to that paper in the program note for this episode. Lisa Gennetian is the Pritzker Professor of Early Learning Policy Studies in the Sanford School of Public Policy at Duke University. She’s also an IRP affiliate. Lisa, thanks for joining us today.

Gennetian [00:00:53] It’s such a pleasure to be here to speak to you today. Thank you for inviting me.

Siers-Poisson [00:00:55] I’d like to start with an explanation of what the term “cash aid” refers to, and also what other names it’s known as.

Gennetian [00:01:04] Yeah, thank you. I really appreciate this question. Language plays such a central role in the way we communicate what things mean. “Cash aid” generally has been used as a term to capture cash assistance, cash support, social safety net, safety net programs. And then if you go beyond the US, you will get into the realm of social protection, emergency assistance. So, “cash aid” is a general term. And I think what all these things share in common is an endeavor by a government body, let’s say, for providing some benefits in the form of cash to vulnerable populations. And vulnerable can be defined in various ways.

Siers-Poisson [00:01:50] And there’s also a distinction between what’s called conditional aid and unconditional. Can you explain that for us?

Gennetian [00:01:58] Yeah, I’d be happy to. So, I’m going to break up conditional in two different ways, and that’ll set the stage for understanding conditional, unconditional, I should say. So, there’s two ways to think about conditional. One is around something called eligibility criteria, right? Do you have the characteristics that make you eligible to get this cash aid? And that’s important because we often have scarce resources from a government perspective and we want to kind of target those resources to again, the most vulnerable. So that could be something like, is there a child in the household? That could be an eligibility criteria. Is there a disability of someone in the house? That could be criteria. Is there loss of a job recently? That could be criteria. That’s different than you are eligible and you get this benefit if you prove that you’ve engaged in some kind of behavior or action. And typically those behaviors in the US context are around a job or a work-related activity or some proof of earnings. But it could also be something like, if we think more broadly, you have proven that your child has been vaccinated. You have proven that your five-year-old or six-year-old daughter is enrolled in school. That’s sort of from a real example, not in the U.S. context, but in another context. So those are all examples of ways of thinking about conditionality. Unconditional doesn’t get us out of the eligibility set of issues, because those typically also have eligibility criteria, children, for example, but means that once you get this benefit, you can, this cash, you can use it in any way. It’s not conditioned on behaviors or proof of some action in order to kind of use the resources available to you.

Siers-Poisson [00:03:42] In the paper that we’re discussing and in your larger work, you look specifically at the effect of direct cash aid on children. Why do you think that should be such a priority?

Gennetian [00:03:54] Couple reasons, one is I generally think, and I don’t think many people disagree, that we should be investing our best resources in the next generation and the upcoming generation from the perspective of, you know, we have benefits from investing in children’s education, right? That education contributes to the economy. There are benefits to ensuring that children stay out of crime, that are thriving individuals and healthy, right? These are all the elements of a society that I think most people can agree on. And so assessing the effects of direct cash aid does not tend to be about whether we should be supporting children. It’s typically about how. And I know we’ll get into that. I also just want to note that child poverty in the US has been stable for a really long time from the point of measurement. It showed declines responding to the way that the US was investing in child poverty, a huge decline in 2021 when we had a huge infusion of cash to families over the course of the pandemic. As of last year, our child poverty rate is about 14%. It’s still pretty high relative to other high-income nations and represents about 10 million children. So that’s pretty sizable and there are big differences according to where you live and children’s racial ethnic group. So those are differences that we should really be paying attention to because that has not changed a lot over time.

Siers-Poisson [00:05:24] You’ve made a good case for looking at the effects of these types of programs on children. But also in your paper, you say that there hasn’t been that much research looking at that aspect of it, that other aspects of these direct cash assistance programs have gotten more research, more attention. What are people looking at when they’re not looking at how it affects kids?

Gennetian [00:05:47] Yeah, there are some interesting tensions when we think about how the government should be spending money on families with children and these are important, right? So we want to support families and children, we also want to make sure that families and children have choices, can operate in their environments, we also want to make sure they’re incentivized to be independent, to not rely only on the government in terms of their income, and so that indeed is one of the, you know, big questions. How do we balance those tensions? So more directly, when people get resources that don’t have conditions, one of the worries is that they become dependent on that income and then they start withdrawing from the labor force, right? They start withdrawing from earning their own income through earnings. And that has been a really prevailing kind of question for the literature and estimating whether that happens or not in response to different types of cash benefits. So that’s been one kind of dominant theme. And we’ve learned a lot over time around those responses. There are a couple of other things that bubble up in this arena. One is, will people be more likely to have children in response to additional resources? And are the people having children people who are ready to have children in the presence of these resources. So, there’s some active conversations around teen births, right, and teen parenting and whether this kind of money has shifted the rate of teen parenting. There have been conversations in a lot of literature on family stability. So, are families more likely to break up if there is an alternative or economic support for children? Are they more likely raise a child as a single parent? And there are lots of views on whether that’s a good or bad or productive environment for children. And then the last is, especially in the space of unconditional income, will people use it kind of quote unquote responsibly? And to me, this is sort of a little bit of confusion of what is I’m going to call cause and effect, right? And so let me just take a moment to describe that a little bit. The cause and the effect dilemma is people who are homeless are more likely to be poor. And so therefore are poor people more likely to use money in ways that make them homeless? And so, you know, people who are poor might be more likely, income poor, may be more likely if we looked at them to have struggles with mental health or substance use or engage in crime to get money to support those kinds of behaviors. But that doesn’t necessarily mean that the avenues of poverty were through, you know, this abuse of spending money in this way. So that tends to be a real tension by giving people money. Are they spending things that we value in society as a positive contribution, right, to social welfare? Or are they using it in ways that can be dangerous to society and to themselves? Those are the kind of four elements, you know, are people dependent on the government when they could be working? Are they having children in ways that they might not be ready for? Are families falling apart? And is money being spent kind of responsibly?

Siers-Poisson [00:09:10] And we’ll dig into what the research shows on a lot of that in just a little bit. But first I want to pause and ask, what are some of the benefits that come with unconditional cash transfers that are kind of the other side of the coin from those issues you just raised?

Gennetian [00:09:26] Yeah. So, it’s going to be hard for me to talk about that without talking about the evidence. And I might blend all of this together. And so, I want to separate what we learn about individuals from what we’ve learned about families with children. Like, I just want to center this conversation around children because it is a little different, right? If you think about raising a very young child and you’re being asked to go to work, whether it’s with the prospect of additional government benefits or not, it raises a whole host of other questions, namely, “Where is the child going to be when I’m working,” right? And “How am I going to get to work knowing that I also have to manage this child,” right? There’s a whole host of parenting and work juggling and balancing that is not as simple as what we just talked about. And so in those cases, I think we are learning some important things about cash and unconditional cash, allowing for kind of making decisions and opening up more choices for families. So whether that is putting money into a particular type of housing situation, whether it is stabilizing food routines and having food on the table every day, or making sure there’s always lunch, whether it’s some other types of routines in the household, and just easing the tension and the pressure of juggling that with work. We actually don’t have a ton of precise evidence, right, in that space. We’re kind of building it now more recently. Where we have, I think more evidence is kind of the dimensions we talked about before, do people cut back their work and participation in work in response to receiving some kind of cash benefit? And that has been, I’m going to say the summary of a couple of decades of research on that is that the effects are modest. They tend to be on the margins of work or not. And most recently, they tend to be pretty small, right? So the responses we’re seeing to this work trade-off and response to cash are, you know, they’re there, but it’s small. And we still don’t really understand what the long-term effects are. Like, do people completely drop out of the workforce? Or again, are they engaging in this kind of like optimizing of how work fits into this puzzle of the rest of my life, whether it’s parenting or taking care of someone else or something else.

Siers-Poisson [00:11:52] For those that do have the concerns about how the money is being used, as you said, fertility responses, labor supply, it’s not that they aren’t in favor of any kind of support. It seems like they’re in favor of different kinds of approaches. What are some of the approaches that get suggested maybe instead of or maybe alongside of cash support?

Gennetian [00:12:15] Yeah, I think the US has shown over time great support for benefits that are conditioned on some kind of work, right? And in fact, something called the Earned Income Tax Credit has had lots of bi, tri, partisan support, all the non-partisan versions of support. It’s also had support at the federal and state level, right, so states have responded by adding more to this benefit. And what that benefit has offered families is kind of a bonus, right? On top of the earnings that they might gain in that year-to-year basis through the tax system. So that’s been, I think, less controversial. And in some ways, its success has kind of bled over to other types of programs that might not be as clean in terms of having a work condition. So, I think in the US, you know, something conditioned on work is usually a pathway forward for having that benefit, have lots of political support. I think the other, I’m just going to maybe go on a little bit of a limb, but I want to name another program that’s had a lot of support and that’s Head Start to this idea of offering intensive child directed services around early education, care, and, you know, Head Start has a whole host of more holistic services at this point for children who are residing in families at a particular income level has also had a lot of support over time. So those two, like, extremes seem to have lived through many political conversations and transitions in the U.S. And have grown, actually, over time.

Siers-Poisson [00:14:01] Lisa, I want to take a little step back or maybe it’s a step up to look at the larger context. And I’d like you to share with us where in the world unconditional cash aid has been used most often and maybe in a longer term than we’ve seen in this country.

Gennetian [00:14:19] Yeah, so I’m going to separate that into two buckets. One place that unconditional cash aid has been used for a very long time is comparable high-income countries. And in that context, it’s not called cash aid. It’s called the child allowance. So again, we’re centering this conversation about families with children. So, you think about Canada and the UK and the Scandinavian nations have long had much more allotments to families based on, you know, the presence or birth of a child, and they vary in the amount and length of time, but always more generous than what we see and have ever seen in the US. So that’s one form that’s been present for a very long time. The other form falls under the bucket of social protection, and this is in low-, middle-income nations. Those tend to have evolved over time in response to need. So that could be emergency, it could be through times of conflict. It could be to support refugee populations that have kind of moved from one nation to another. And so, this is a response to that situation, natural disasters. You know, there are some versions of these social protection models that are cash-based that have scaled in villages or districts within nations. And so those are the kind of two models. Most of the social protection-based responses are government or non-governmental bodies, and most of what is happening in the child allowance side, I would argue, is baked into like a tax and social safety net system in the high-income nation context. So, they also come from slightly different bodies, but with a common mission of providing some resources for families.

Siers-Poisson [00:16:08] I’m sure that the social safety net system in those different countries you mentioned vary from one to another, but it also feels like maybe the U.S. system is much more different from them. How do the findings, and I’d love to have you share some of those, how do the findings from those other countries, especially those middle to higher income countries, how does that look in a US context?

Gennetian [00:16:38] I guess I’ll start backwards. The spending irresponsibly hypothesis has generated very little evidence in support of it. And that’s actually not just the US and higher-income countries, that’s also across low- to middle-income nations. Um, so people have done very intensive meta-analyses, kind of collecting information across many, many, many studies and many years of data. And that is a hypothesis that seems to have very little traction so far. I think the questions around work and engaging in paid activity is really context specific, right? If we think about what work looks like in low- to middle-income nations, it is just a different landscape, texture, market than high income nations. So there, I think that the literature actually points in kind of different directions. The literature in low-to-middle income nations is that people use the resources, you know, cash, to invest in what has been called sort of asset-based activities or activities that will generate some income for the household. And so just for a very blunt and simplified example, invest in the cow, the cow makes milk, the milk gets sold, that’s income generating. And so, we see lots of examples of that in low- to middle-income nation contexts. In the high-income nation context, we’re not going to see people buying cows. We’re going to think about other scenarios, and perhaps there is some investing in entrepreneurial activity or, you know, putting your toe into a certificate program to increase your education credentials. But those on net also might mean you’re reducing your formal labor market behavior in the way that we measure in the high-income context. So, we see more increase kind of earnings in the low-to-middle income. And then less of that in the high-income context, not huge, right, drops in labor force participation or huge drops and reductions in earnings. And I think we have a lot to learn about what kind of trade-offs are happening.

Siers-Poisson [00:18:49] A lot of those other higher-income countries also have more robust supports. I’m thinking especially like paid family leave, which provides a literal safety net, I think, when people have to attend to unexpected, perhaps medical issues.

Gennetian [00:19:06] Yeah, I think that’s right. I think the US has had some success in the Family and Medical Leave Act, but that’s unpaid leave. So that gives you the right to leave, but it doesn’t guarantee any resources. And so, when people have resources in those couple of months, it hinges a lot on the type of job they had, the state they’re in, the geographic place they’re in, etc. And so it’s very patchy. It’s not a very consistent policy. That is a big difference between the U S and other high-income nations that have much more robust and consistent leave policies. So thank you for mentioning that. You know, I think leave in low- to middle-income nations is again, a whole different ball game. Yeah. I think the other thing is child care. I think child care looks very different across these high-income nations, we have more of a patchwork of options available in the U S depending on where you live. And a patchwork across formal center group-based programs versus home-based programs versus what we see in other higher-income nation contexts where there’s just a more consistent investment in an option, right, a public option for childcare.

Siers-Poisson [00:20:22] I want to get into current experiments of direct cash assistance programs in the US in just a minute, but I do want to note that while it hasn’t gotten a lot of traction, there have been different programs that have been tried over the years, some going back many decades. I’m thinking first about the Mothers’ Pension Program. Can you explain that?

Gennetian [00:20:45] Yeah! The Mother’s Pension Program, so there’s been some fantastic work by Anna Aizer and colleagues looking at the very long-term effects of this program. So, this was a program that launched at the beginning of the 20th century, so many, many years ago. It was sort of a precursor to thinking about what used to be the Aid to Families with Dependent Children Program. That was born out of the 1960s era of what we think today of the U.S. social safety net programs, right? The birth of those programs. So, the Mothers’ Pension Program, it was a pension, right? So, the idea was there were these widowed mothers, and they were raising children because their spouses were dying in wars, they were dying. And so, mothers at the time had few formal labor market options. And so, there was a concerted effort to compensate them. I just want to note that a lot of mothers were not eligible, right? So what we know from the Mothers’ Pension Program was very much based on white mothers. And what we knew about the long-term benefits in terms of data also had some limitations, because the way we understand long-term benefits was threading together information based on the names of children. And because last names change a lot for women, we know we can do a better job at measuring impacts on boys, right? Because they tend to keep their name. So, name is the thread that we can track over time. So, what we’ve learned in analyses in this great work that Anna Aizer and colleagues have launched is that there are long-term benefits to—intergenerational benefits—to receiving these cash supports during this very vulnerable time period for mothers and children.

Siers-Poisson [00:22:37] There was also a program called the Negative Income Tax. How does that fit into this picture?

Gennetian [00:22:44] Yeah, another grand experiment. So, this happened in the 1970s, was supported by Nixon at the time. And, you know, really was the genesis of, I don’t know, dozens of economists who were kind of brought, with support from the president, “Let’s come together, let’s think about this idea of a basic income for people in the US. What would that look like? And what should we learn if we’re going to experiment?” So, the Negative Income Tax experiments, I think I am accurate in saying probably the largest and most, and boldest kind of set of experiments that the US has ever hosted. I don’t think we ever replicated something like that since then. So, it had eleven different, what we call treatments, right, eleven different tests, and they were spread across many, many different sites in the US. And the idea was to model, right, we started this conversation earlier to thinking about labor supply, so how do people respond to income in terms of their workforce participation and their earnings? And so, to really understand like where that sweet spot is, like at what level of income will this matter the most and how much will it matter? All of these treatment arms, these kind of innovations of “Let’s test this.” Kind of varied how much income you would get at what margin, right? At what margin you were thinking about shifting going into the labor force or not, or how much money you were earning or not. And so, this was a big grand experiment. We also learned a lot. There were definitely some labor supply responses through this experiment. In general, I want to name one thing, my favorite story, the Negative Income Tax experiments that you might be wondering, the audience might be wondering is like, “Well, what happened?” It was a huge investment. It came from up high, our federal government, and then it got shut down. And one of the things that happened is that we learned in some of the sites that this was implemented that the recipients of the Negative Income Tax were breaking up, that families were separating. And this was in the 1970s. And so, this idea of divorcing families, I’ll use that term, was very concerning. Increasing family instability was kind of a, it was a no-go. And so that quickly kind of put a damper on the Negative Income Tax experience. Now, some versions of them have continued. In Canada, there’s kind of a similar version of the Negative Income Tax experience, people continue to analyze the data. And so it’s not that the data collected in the experiments have not had long standing contributions to science. That’s certainly true. But in terms of a policy, it was my understanding family instability that led to kind of the idea of this as a policy that could have traction in the US.

Siers-Poisson [00:25:44] Let’s dig into the current landscape of direct cash assistance programs in the U.S. What are the different forms that they take?

Gennetian [00:25:52] Yeah, the literature has certainly been really exciting to think about what falls under this umbrella of “cash.” So let me talk about a few examples. One is examples due to special circumstances. And one of those is learning from casinos that are on tribal lands and their right to use the revenue and profit from casinos to give back to the indigenous tribes in which the casino’s lands were built on. So that is conditioned in some way, you have to be a member of the tribe, but unconditional in that the money is just dispersed, right? And it’s based on revenue. So, it might not be exactly the same money all the time, but it is a consistent kind of stream of income as long as the casino is still operating. There is great work around what we’ve learned around those payments, around improvements in children’s mental health, improvements in children’s achievement scores. So generally, kind of positive effects on at least children. The other really interesting ,and it’s had a lot of a whole research group behind it, is from a special circumstance in Alaska. Not so different from the tribal casino scenario we just talked about in that it is also what revenue is generated from the land. People get money who live on the land. So, this is the Alaska Dividend Fund. This was recognizing that oil is generated in Alaska and there was early insights that people who are residents of Alaska should reap some of the benefits of the profit and revenue from that oil. And so there is a whole body of work that’s been looking at those cash disbursements to people who are eligible, meaning they live in Alaska. And that’s also generally been positive. We haven’t learned a lot there on children’s developmental outcomes, but there has been some evidence suggesting reductions in engaging with the Child Protective Services system, which is good. So lower levels of child neglect, for example, child abuse and neglect, spending in ways that are good for children, no evidence on irresponsible behavior so far. And there’s been some good work looking at have responses to working that again are small to modest, you know, no big concerns there. So that’s two kind of special circumstances, but we can learn things, some really great things. The pandemic offered also a time period in which we can learn what happens when cash benefits expansions are available to people. There was a big expansion of something called the Child Tax Credit to families who had not been eligible for it before. So, meaning people who didn’t have earnings were not eligible to get something like the Earned Income Tax Credit. Under the expansion in 2021, they were suddenly eligible for this tax credit and there’s a host of studies examining what that cash infusion offered to families. The evidence is mixed on some aspects of well-being, like psychological outcomes, but also generally very positive reducing food insecurity. Helping families spend and save in ways that are good for their family and their environment. And the jury’s still out on children’s developmental outcomes, really hard to measure that in real time and lots and lots of reports about how this expansion really helped people out of impossible choices, right? Improving how to manage. Of course, it was a special time, it was during the pandemic. So, there are these also big questions about, does this generalize to a period in which we’re not under a pandemic? Those are sort of the three big bodies of work. There’s lots of pilots going on right now, getting cash to families, mostly in local areas, cities in particular. There’s hundreds of them at this point. And so, and efforts to collect, you know, systematic data across these pilots. You know, the reports of how the cash is beneficial are really consistent. The impact of cash on people I think is, you know, the jury’s still out. We’re still learning about the effects.

Siers-Poisson [00:30:15] Lisa, what, if anything, has surprised you about policies that have built up around cash transfers in the US?

Gennetian [00:30:24] Ah, all right, that’s a great question. You know, I think I continue to be surprised about how it’s framed. I continue be surprised around the framing around, you know, government budgets, long-term dependence on the government, that people will be lazy, people will drop out of the labor force, they will reduce their, you know, potential for earnings. Versus, or maybe and, how this can be a real investment in people and children and communities. I continue to be surprised at the dominance of one of those debates versus the other. And I also continue to be surprised at kind of the assumptions that people make about people don’t have resources. That, you know, in general, if you ask any parent, no matter what their resources are, they want the same thing for their children. They want good opportunities for their kids, they want their children to be safe, to go to good quality schools, to have good medical care, you know, for the air not to be polluted, to be able to get to work. And I, yeah, I continue to be surprised we have to keep telling that story and offering those stories to convince people that we all kind of want the same thing for our children.

Siers-Poisson [00:31:39] What policy or practice supports could increase the effectiveness of these programs in the United States context?

Gennetian [00:31:47] I think in the United States, I guess the other thing I’ve learned is that there are good reasons why we have programs and policies across different areas, right? So we have policies around housing, we have policy around food, we have healthcare, something like Medicaid. We have tax credits that run through the tax system. I’m appreciating why it is designed that way to… be resilient, I think, around political pressures to change things and to have something remaining for people in the US, because we’re always thinking about trade-offs, we’re thinking about where will government invest versus pull back, and I am struck at the result of that making things very complicated for families, right? And so, I’m going to say the following thing, like why is money being left on the table when families are eligible for benefits? Are the families who can benefit the most actually getting these benefits? Why are we making it so demanding to juggle through like four systems to get food and housing and work support in place? Why can’t this be simpler? So, there’s like a really unique tension, I think in the US, along those lines. I’ll add another tension in the US, which is federal-state-local. And so we have a mix of, you know, resources coming from the federal government, but a lot of decision-making happening state and local. And that adds additional layers of protection, but also confusion and complexity. And so what would be my wish. It would be terrific if there was a way to systemize this for the family experience or the person-specific experience entering into this system. I think there have been some innovations around this, but more can probably be needed. And then I think the other area that we tend to not address explicitly is the reality of the demands of parenting. So, to parent and to work, we need children to be in safe places. And we haven’t really addressed the cost, availability, access, quality of non-parental care environments in a way that I think makes it easy for families to thrive.

Siers-Poisson [00:34:16] Well Lisa, thank you so much for taking the time to discuss us with us. It’s a really interesting area of research, and we appreciate you sharing your knowledge with us!

Gennetian [00:34:24] Thank you! It was a delight to be here.

Siers-Poisson [00:34:28] Thanks so much to Dr. Lisa Gennetian for joining us to discuss the landscape of direct cash aid in the United States and her recent co-authored paper titled, “Unconditional Cash Transfers for Families with Children in the U.S. A Scoping Review.” You can find a link to that paper in the program note for this episode. Please note that views expressed by our speakers don’t necessarily represent the opinions or policies of the Institute for Research on Poverty or of any other sponsor, including the University of Wisconsin–Madison. Music for the episode is by Poi Dog Pondering. Thanks for listening.