Cash Can Make Its Absence Felt: Randomizing Unconditional Cash Transfer Amounts in the US
112 Pages Posted: 18 Jul 2022 Last revised: 19 Dec 2023
Date Written: July 5, 2022
Abstract
We randomized 5,243 Americans in poverty to receive $500, $2,000, or nothing, then measured
their financial well-being, psychological well-being, cognitive capacity, and health through surveys
administered one, six, and fifteen weeks later. While bank data show that the cash increased
households' spending, we find no evidence that (more) cash improved survey outcomes: estimates
are overwhelmingly negative or indistinguishable from zero, in contrast to experts' and laypeople's
predictions. Our data suggest that the windfall made participants' (unmet) needs more salient,
which caused distress. We rationalize these findings through a model that illustrates how receiving
cash can also highlight its absence.
Keywords: Cash Transfers, Poverty, Welfare, Behavioral, Household Finance, Field Experiments
JEL Classification: C93, D91, G50, I30
Suggested Citation: Suggested Citation