FEDERAL Hill House is a squat building in central Providence, within earshot of the city’s main highway. On a recent rainy Monday, a school holiday, the building was full. Older children lounged in front of a film, while toddlers roamed around the soft play area. Some regularly spend more than ten hours a day here, on top of school hours, while their parents work. The charity provides essential support for low-income families: it picks up children from home before school starts, and looks after them long after it ends. It accomplishes a lot on a tight budget. In several places, the ceiling lets through water from the grey Rhode Island sky.
The youngest group of children at Federal Hill House are between 18 months and five years old. There are 12 of them, with a waiting list to join. The executive director, Kimberly Fernandez, says some cannot name any colours when they first arrive. Some come to the centre hungry (it provides meals) or speaking no English. Others arrive with behaviour problems. Parents’ work schedules are often so inflexible that Federal Hill must cover basic logistics beyond school pick-up and drop-off. Ms Fernandez says she had to use her own car after some children took the wrong bus home from school and wound up stranded at the depot. Their mother was unable to leave work to fetch them.
Plenty of evidence suggests that growing up poor, living through these kinds of scrapes, has a detrimental impact on child development. Children from rich families tend to have better language and memory skills than those from poor families. More affluent children usually perform better in school, and are less likely to end up in jail. Growing up poor risks the development of a smaller cerebral cortex. But these are associations between poverty and development, not evidence that poverty causes these bad outcomes, says Kimberly Noble, a neuroscientist at Columbia University in New York. She is part of a team of researchers running a three-year experiment which will, for the first time, search for causal links between parental income level and a child’s early development.
The team will start recruiting the first of 1,000 low-income mothers next week. They will be invited to join the study, which is called Baby’s First Years, shortly after giving birth at one of ten hospitals in four cities across the United States (to avoid influencing the experiment, the researchers asked The Economist not to publish details about the cities). Of that 1,000, roughly half will be randomly selected to receive an unconditional $333 a month, while the others will form a control group that will receive $20. The money, which is completely unconditional, will be loaded onto a pre-paid debit card every month for 40 months, on the date of the child’s birthday. The hypothesis is that this steady stream of payments will make a positive difference in the cognitive and emotional development of the children whose mothers receive it.
The first data gathered will be baseline interviews with the mothers just after recruitment. This will reveal the various backgrounds from which the mothers come (all will have incomes below the poverty line, roughly $23,000 for a family of three). The researchers will conduct phone interviews with all 1,000 mothers around their child’s first birthday, then visit them in their homes when their children turn two. When they turn three, they will be invited with their mothers to a research lab in their city, where their child’s cognitive skills will be tested and the electrical activity of their brains studied.
The interviews will also measure mothers’ stress, mental health and employment patterns. They will ask how the amount of time mothers spend with their child is changing, and gather data on the quality and cost of child care and other child-related expenses. The researchers will also have a record of transactions made with the debit card. The unconditional nature of the cash transfer is inviolable: even if mothers choose not to take part in the follow-up studies, for which they are paid extra, they will still get the income for 40 months. The 1,000 mothers, minus potential dropouts, will provide enough statistical power to detect effects equivalent to two months’ worth of development in early childhood, says Greg Duncan, an economist on the team from the University of California, Irvine.
A real-world experiment of this magnitude comes with challenges. It has been six years in the making, and the team has spent years raising some $15m for it. About $5.8m will be given away over the next four years, to which must be added the cost of recruiting and monitoring 1,000 people over that time. The researchers worked to get new legislation passed in two states in which the experiment will be carried out, in order to make sure that those taking part remain eligible for public benefits while they receive the extra income. The entire experiment has been assessed by the Institutional Review Board (IRB) at Columbia University’s Teachers’ College, with separate IRB boards at all nine hospitals either verifying those terms, or drawing up their own, before the experiment starts. Ethical approval has been particularly complex, since mothers will be both research subjects and medical patients recovering from childbirth when they sign up.
The experiment is unique in two aspects. One is its exclusive focus on the impacts of income, unrelated to employment. The other is its focus on the first three years of a child’s life. “We know virtually nothing about the causal effects of income in years zero to three,” says Lisa Gennetian, who studies the psychology of poverty at New York University.
Ms Gennetian, one of several collaborators on Baby’s First Years, says its closest analogues were carried out in Minnesota in the 1990s. There parents were randomly assigned to a different mix of welfare policies which altered their incomes, and their children’s development was monitored. The Minnesota studies suggested that about $4,000 a year is enough to see significant effects on a child’s development, but because the extra money was connected to parents’ work, they did not control for other factors that might also have influenced the children’s development. In contrast, mothers in the new experiment are free to leave their jobs to look after their new child, if they want to.
How to spend it
Dr Noble, Ms Gennetian and their colleagues are not alone in their ambition to study the impact of cash on well-being. Y Combinator, a startup accelerator in Silicon Valley, has formed a research arm to investigate the more general impacts of direct cash gifts of this kind. That experiment, which has not yet started, plans to give $1,000 a month to a randomly selected third of 3,000 people from two American states, monitoring any changes in health, time-use and crime induced by the cash.
Part of the Baby’s First Years study will be about seeing how the extra cash is spent, but signs already suggest where it might go. In a pilot study of just 30 mothers, run in New York in 2014 to work out the logistics of handing out cash, the money was usually spent within three days of receipt, mostly at supermarkets and department stores. Ms Fernandez says nappies are a particular problem for new mothers on low incomes, as they often cannot afford the upfront membership fees required to shop at large discount supermarkets in the suburbs, or the costs of travelling to get there, and so have no way around paying a premium at nearby corner shops. “Food, diapers and travel,” says Ms Fernandez, is what this money will go towards. “You know what you do when you can’t afford to buy diapers? You change your baby less often. You let them walk around in a dirty diaper,” says Katherine Magnuson, the team’s poverty expert at the University of Wisconsin-Madison.
Ms Fernandez suggests that the experimental money will not so much transform new mothers’ lives, as make it possible for them to take advantage of what they already have. For example, many young parents would like to rely on their own parents for child care, but cannot afford the travel costs to drop their children off. In American cities, where public transport is often scarce and connections are slow, having the money for an extra tank of fuel, or even a lease on a cheap car, might save new parents tens of hours every week. That extra time might be spent with their children, earning extra money, or just improving an otherwise stressful life.
The results of the experiment will take years to arrive. If the researchers’ hypothesis, that the unconditional handout will have a positive impact on early child development, is confirmed, then old arguments about welfare will get a new evidentiary kick. It would mean that no amount of reflexive bootstrap-tugging could make up for the disadvantages that poverty casts over a child’s developing brain. In the meantime, families like those at Federal Hill will keep struggling to get by.