What If We Just Gave Young Poor Mothers Money? A New RCT Will Find Out

Poverty is a hard nut to crack. We’ve been at it (half-heartedly) for more than two-hundred years now, our solutions swinging between “fix them” (“them” in this case being poor people) to “fix the root causes.” Advocates who claim that poverty hurts children are countered by others who say “it’s not poverty, it’s single-parent families or character” or any number of other explanations. And of course, the hoary argument of who is “deserving” of support has a long and storied history, evident still today in the for the “working poor” at the expense of those who aren’t.

All of these arguments are not just hot air or academic diversions. After all, if you believe the problem is a single mother’s character, “the fix” will be very different than if you think the problem of single-parent families stems from a lack of marriageable men because good paying jobs have disappeared. Look no further than the difference between Republicans and Democrats in their policy proposals.

To date, it’s been a he-said/she-said argument, and the pendulum has swung regularly between the two camps. The he said/she said persists for a simple reason. It’s very hard to prove either argument. You can’t get very far into these debates with correlational evidence only, which is what we have.

But we may be on the brink of a “smoking gun” of evidence that could put this argument to rest.

I talked recently with , the lead researcher on this new project. Duncan, an economist who studies the connection between poverty and child development, is essentially one of t (PSID), or as he calls it, a “motion picture over last 40 years of rising income inequality” and the 2013 recipient of the , a kind of Nobel for social scientists. Adding to his cred, he donated the majority of his $1 million Swiss francs prize to his new study.

His latest project is that smoking gun and his “dream project,” he told me. The results can help settle the role of poverty in early childhood development.

Duncan has assembled a powerful wheelhouse of neuroscientists, economists, and sociologists to conduct a randomized control trial (RCT) of low-income mothers with infants. The study will put to rest the correlational muddiness and offer a definitive answer. With a big enough sample, the mere fact of randomly assigning a group of people to either a “treatment” group or a control group washes out all the other unique factors that influence poverty. The two groups are essentially identical, and thus any changes can be attributed to the intervention.

The intervention in this case is money. The 500 moms in the treatment group will be given a debit card, loaded each month with $333 for first 40 months of their child’s life. This is a “rock steady” stream of income, Duncan said, and if social science theories are right, it should be just the thing to foster healthy early development, which in turn sets off a chain of events that put a child on a more secure road to later success in life.

The 500 moms in the control group also get a debit card, but only $20 a month. That’s a big enough difference to test the impact of money early in life.

“Think of money as providing a cushion against eviction, utility cut-off, emergency child care,” said Duncan. “One could imagine moms using this money to afford a larger or safer apartment, or delaying entry back to work, or buying things for her child. We’ll be monitoring how the kids are turning out and the changes in the families as a result of more money.”

Duncan is essentially taking the work he has done with the PSID to a new level. Research from the PSID shows strong correlations between income in early life and later life circumstances in adulthood.  Children from poor families are less likely to finish school, and they work and earn less than their more fortunate peers. But left unanswered is whether it’s income or something else.

The research team will evaluate the families at 24 months and the children’s cognitive development at 36 months. The first assessment will collect data about the family processes that might be affected by steady stream of income. They’ll look at the sensitivity of parenting, and measure stress levels with biomarkers. At 36 months, they’ll meet the kids in a lab and experts will use EEG’s and conventional measures of executive and cognitive functioning.

While they’re at it, the researchers will also test a number of new theories about the link between poverty and decision-making, like the “” problem—our tendency to make poorer decisions after a string of tough decisions leaves us mentally exhausted.  The team will randomly assign families to have their assessments at different times of the month, some closer to their “flush” days when they receive their cash and others at the end of the cycle, when they’re probably down to pennies and forced to do a lot of heavy mental lifting as a result.

In the end, it’s the policy ramifications that may be most important. There’s a saying on the policymaking playground: “Oh yeah?” and “So what?”  This study answers both. The “oh yeah” doubters will have to refute an airtight study. And the “so what?”

As Duncan put it, “There will be two kinds of policy implications from this study. The first keys of finding whether poor children’s cognitive functioning is affected by a stable minimum income. Policy responses to this finding might be not cutting existing safety net programs or, on the positive side, a family allowance with the largest payments to families with very young children. Second, if there’s a really strong pathway, say, moms’ delayed return to work following birth, and in turn the kids benefited, that would suggest a different policy approach to parental leave.”

The project is getting underway, but the team is still raising the approximately $15 million needed to pull it off. They’ve found some early support, but as always, it’s an uphill struggle to get people to invest, even among the “new money” from hedge fund philanthropists and social impact investors.

A group of former hedge fund owners was on the brink of a sizable contribution to the study, even going so far as to double the amount the mothers would receive—until, that is, they asked some DC insiders what the prospects were for policies that would substantially increase benefits to families with very young children. Zero, came the answer. And with that, they pulled their funding.

“It was very disappointing,” Duncan said, “that they didn’t see our project as being as informative about the wisdom of benefit cuts, which are hotly debated these days, as benefit increases.”

Such is the world of cold-eyed business world investors. I have no doubt, however, that Duncan and his team can raise the money for this game-changing study.  Hey crowd-funding, is anyone listening?

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