Recipients of cash benefits were healthier and less likely to visit the emergency department for mental health or substance abuse issues, according to a groundbreaking new study by Harvard researchers.
The recipients of the monthly cash benefit, drawn by lottery in the low-income community of Chelsea, Massachusetts, were also more likely to see medical subspecialists. Importantly, while previous analyses of cash benefits warned against recipients’ increased use of drugs and alcohol, the new study found cash benefits led to 87% fewer emergency department visits related to substance use.
The study, published in the Journal of the American Medical Association on Monday, is one of the largest randomized controlled trials of a guaranteed income program in the country and an important experiment in what happens when low-income people are simply given cash, without conditions on how to spend it—a proposal sometimes referred to as universal basic income.
The three authors of the study are Jeffrey Liebman, the Robert W. Scrivner Professor of Social Policy and director of the Rappaport Institute for Greater Boston at HKS, Sumit Agarwal, a physician and health economist at Brigham and Women’s Hospital, and Benjamin Lê Cook, professor of psychiatry at Harvard Medical School and Cambridge Health Alliance.
Through a lottery—funded by city, state, and philanthropic contributions—the program provided up to $400 each month for nine months to people in need. About 2,000 people—roughly 15% of Chelsea’s households—were selected to receive cash cards. The researchers compared outcomes of card recipients with those who entered the lottery but didn’t receive a card. The program ran from November 2020 through August 2021.
The researchers linked participants to their medical records across hospitals and health systems in eastern Massachusetts, gaining a view into both the participants’ health and into their use of health care services. They found that cash benefits led to 27% fewer emergency department visits, including 62% fewer emergency department visits for behavioral health reasons, and 42% fewer admissions to the hospital from the emergency department.
“The worries and uncertainty that come from living in poverty lead to worse health, particularly mental health,” Agarwal observed. “Our findings suggest that by reducing financial strain and improving economic resilience cash benefits can lead to fewer visits to the emergency room for depression, anxiety, suicidal ideation, and substance use.”
“Families facing economic hardships have a wide range of needs. The great strength of unrestricted cash benefits is that each family gets to choose how to use its funds.”
Jeffrey Liebman
The research also suggests that cash benefits can reduce health care costs by reducing use of expensive emergency room and hospital care. However, the cash benefits did not have measurable short-term effects on health markers, such blood pressure, body weight, or cholesterol levels.
“Families facing economic hardships have a wide range of needs,” Liebman said. “The great strength of unrestricted cash benefits is that each family gets to choose how to use its funds. In the set of research papers that have come out of the Chelsea Eats experiment, we have seen families benefit through better health, improved nutrition, and better overall financial well-being.”
The program was born during the COVID-19 pandemic. Chelsea, which is majority Latino and has a large immigrant population, was hit particularly hard by the economic crisis. Many workers lost their jobs during the lockdown and many undocumented residents were not eligible for federal relief. Food insecurity was rampant, with more than half of the children in the study’s sample sometimes or often not getting enough food to eat at baseline.
The city initially gave out food directly but came to realize that residents might be better off if they received funds to do their own shopping. So, officials decided instead to launch the experimental program.
In the Rappaport Institute’s earlier studies of the Chelsea Eats program, Liebman and his coauthors found that cash card recipients spent about 65% of the money they received at places where food was the primary product, such as grocery stories, local food markets, wholesale clubs, and restaurants. They also found that the cards eased food insecurity in the early months of the program.
The researchers attribute the difference in results in their study—compared to earlier research that had found null or modest effects—to the size and scope of their study, which was larger in sample size, provided recipients with a 23% increase on average in monthly income, and leveraged administrative health care data to measure outcomes.
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