In “What Happens When the Poor Receive a Stipend,” Moises Velasquez-Manoff, a science writer, reports on
a remarkable study of a “natural experiment” in the impact of giving poor
people more money. (I learned of this study from an email to the law clinicians' listserve from Francine Lipman of UNLV's William S. Boyd School of Law; she's a close observer of poverty issues.) It’s clear that poor people have many problems which make it
hard for them to break out of poverty, and from that proposition it can be
argued that money won’t actually help them, because those other problems will
prevent them from using their new resources to change their lives.
But this natural experiment,
studied by Professor Jane Costello of Duke University and others, suggests
otherwise. The Eastern Band of Cherokee Indians in North Carolina, opened a
casino in 1996 and decided to “distribute a proportion of the profits equally
among its 8,000 members.” By 2001, “casino profits amounted to $6,000 per
person yearly.” That’s a lot of money, and in fact by that year “the number of
Cherokee living below the poverty line had declined by half,” apparently from
approximately 20 % of the Cherokee population to 10 %.
But weren’t the no longer
poor Cherokees still subject to all the ills that had plagued them before?
Well, no. “[J]ust four years after the [cash] supplements began, Professor
Costello observed marked improvements among those who moved out of poverty. The
frequency of behavioral problems declined by 40 percent, nearly reaching the
risk of children who had never been poor.” The effect continued in subsequent
years: “Minor crimes committed by Cherokee youth declined. On-time high school
graduation rates improved.” And it turned out that “[t]he earlier the
supplements arrived in a child’s life, the better that child’s mental health in
early adulthood.”
Why was this? One possibility
is that it wasn’t money alone that changed things, but rather the combination
of money for individual households plus social programs that the Cherokee
government also created using additional casino revenues. Another of the social
scientists studying these events, Randall Akee of UCLA, thinks otherwise,
however, since apparently the social indicators began improving even before many
of the social programs got under way.
Why would more money make so
much difference? No doubt that’s a big question but here are two
straightforward possible answers. One is that what makes the poor different from the
rich is, after all, mostly just one thing: the poor have less money. Many problems
that the rich have can be solved with money. Similar problems that the poor have cannot
– because there’s no money. In particular, as Velasquez-Manoff suggests, the
stress that parents feel when they can’t provide for their families – stress
that likely affects their parenting in many ways – may simply go away when they
can provide for their families after all.
The other answer is that what
giving each household money did was to enlist the ingenuity of every household
in improving its lot. It would take a really ardent believer in paternalism to
imagine that the government could think better for each of these households
than the households could for themselves. The cash enabled the people to do
what they otherwise could not, namely to seek the good for themselves.
One natural experiment is not
enough to settle a complex social question. A decline in mental illness to
almost the levels of better-off children still leaves plenty of mental illness,
and plenty of need for other programs to address it. I’m certainly not arguing
that people always make good choices, even when they have the resources to do
so. But people – rich and poor – are both flawed and powerful, and it’s always
right to keep in mind how much people can accomplish if they actually have the
chance.