What's New Here's What Happens When You Give People Free Money (They Get Poorer)
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Jul 25, 2024 Researchers from OpenResearch released results of a study on giving unrestricted cash grants to impoverished Americans, sparking debate over welfare. The study found that while recipients used the money for necessities, it did not significantly improve their financial stability. Recipients also utilized the extra income for helping others, healthcare, starting businesses, and personal well-being, but did not improve long-term financial situations due to reduced work hours and increased debt.
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Free Money Boosts Spending, Not Wealth
- Unconditional $1,000 monthly cash grants helped poor Americans meet basic needs but didn't improve long-term financial health.
- The cash increased expenses and debt, leading to no significant boost in net worth or physical well-being.
Cash Encourages Giving and Entrepreneurship
- Cash recipients increased giving to others and invested more in healthcare and food quality.
- Entrepreneurial activity rose, especially among Black recipients and women, and low-income individuals moved out on their own more often.
Cash Grants Reduce Work Participation
- Recipients reduced work hours, with earnings dropping by at least 12 cents per dollar received.
- Money bought recipients time, letting some take breaks or pursue more meaningful employment.