Last May a study came out suggesting that merely giving people money doesn’t do much to lift them out of poverty. Families with at least one child received $333 a month. They had more money to spend, which is a good thing, but the children fared no better than similar children who didn’t get the cash. They were no more likely to develop language skills or demonstrate cognitive development. They were no more likely to avoid behavioral problems or developmental delays.
These results shouldn’t have been a big surprise. As Kelsey Piper noted in an essay for The Argument, a different study published last year gave families $500 a month for two years and found no big effects on the adult recipients’ psychological well-being and financial security. A study that gave $1,000 a month did not produce better health, career, education or sleep outcomes or even more time with their children.
Way back in 1997, Susan E. Mayer, a University of Chicago sociologist and behavioral economist, published “What Money Can’t Buy.” She began her research believing that cash transfers would make a big difference in people’s lives but was persuaded by the evidence that even if you doubled a family’s income, it would have a limited effect on their children’s dropout and teenage pregnancy rates or other outcomes. She stated her findings clearly: “The results in this book imply that once children’s basic material needs are met, characteristics of their parents become more important to how they turn out than anything additional money can buy.”
She added, “Parental income is not as important to children’s outcomes as many social scientists have thought.” Rising out of poverty also requires the nonmaterial qualities we now call human capital, such as skills, diligence, honesty, good health and reliability. Mayer concludes, “Children of parents with these attributes do well even when their parents do not have much income.”
As a society, we are pretty good at transferring money to the poor, but we’re not very good at nurturing the human capital they would need to get out of poverty. As a result, we do an OK job supporting people who are in long-term poverty but a poor job of helping them lift out of poverty. As Piper noted in a subsequent post, we spend more money combating poverty today than the entire U.S. G.D.P. from 1969, yet “the share of Americans whose pretransfer income places them in absolute poverty has barely fallen.”
Piper’s essay kicked up a bit of an internet storm. You might have thought the progressive reaction would have been: We need to keep giving poor people money, but we also need to focus on the human and behavioral factors that will enable them to build comfortable, independent lives. But that wasn’t the reaction. The progressives I saw doubled down on the thesis: Poor people just need money.