New findings from war on poverty: Just give cash

Increased income from a western N.C. casino helped improve the well-being of local Cherokee children.
Increased income from a western N.C. casino helped improve the well-being of local Cherokee children. OBSERVER FILE PHOTO

There is a typical debate that tends to happen whenever people start talking about poverty.

Conservatives try to blame poverty on the bad behavior of the poor: If lower-income people would just get married, stay married, avoid drugs, work hard and not commit crimes, the poor would make a lot more money.

Liberals typically assert that it’s the structures of society, not individual failings, that cause poverty: Poor kids start with a disadvantage because of residential segregation and bad schools. Even good behavior wouldn’t help the poor get ahead.

The truth, as usual, lies somewhere in between. But I’ve been seeing some recent research that tends to shift my view toward the liberal side of the debate. Basically, we’re starting to learn that what conservatives label “bad behavior” is often a result of growing up poor.

First, there is a new National Bureau of Economic Research working paper. The authors find that giving poor families money, on top of the benefits they already receive, improves their children’s behavior:

“Our results indicate that there are large beneficial effects of improved household financial well-being on children’s emotional and behavioral health and positive personality trait development…Parenting and relationships within the family appear to be an important mechanism..”

The authors found a natural experiment to test their hypothesis. They realized that the opening of a casino in western North Carolina would provide a sudden flood of cash to members of the local Native American tribe, the Eastern Cherokee – about $4,000 a year for every adult. The researchers found that in the wake of this sudden windfall, poor Native American children suddenly started doing better on various psychological measures of emotional well-being.

With repeated observations made over time they confirmed that the change wasn’t ephemeral. Children whose families got the money ended up having better job outcomes at age 25. Examining surveys of these families, Akee et al. hypothesize that much of the improvement comes from more harmonious family relations. Parents are happier because they have more money, leading to less fighting within the family. This lowers stress on kids, making them healthier, happier and better-behaved, and leading to a more productive adulthood.

This, of course, flies in the face of conservative claims that welfare encourages bad behavior and destroys families.

The second big new piece of evidence comes not from economics, but from neuroscience. In a study published this year in Nature Neuroscience, a large team of neurologists found a correlation between child brain structure and family income. Simply put, family income is correlated with children’s brain surface area, especially among poor children. More money, bigger-brained kids.

These results are not simply bolts from the blue. Again and again, researchers have found bad behavior is a result of poverty.

This research should change how we think about poverty and welfare. Even if bad behavior does make poverty worse, it’s also the case that poverty causes bad behavior in the first place. By giving poor people money, we may be able to break that cycle.

Improving the condition of poor children is not only good for them, it’s also good for society. Children who are more emotionally stable and better behaved engage in less crime and less violence in schools and out, making the country a safer place to live. So we shouldn’t see poverty alleviation as merely a mission of mercy. It would make the U.S. better for all Americans.

Noah Smith is an assistant professor of finance at Stony Brook University.