The case for a children’s basic income

A guaranteed basic income is becoming the pipedream du jour on the left, making it all the way to a favorable review in the pages of the New Yorker.  Experiments are underway in towns in Finland and the Netherlands to give all citizens a government-provided minimum income.  Venture capital firm Y Combinator is planning a basic income pilot program in Oakland, and non-profit GiveDirectly is trying to alleviate extreme poverty in East Africa with a pilot of its own.  In Switzerland, a basic income ballot referendum went down to defeat, but more than half a million Swiss voters supported creating such an entitlement.

It’s an intriguing idea, and one that serves a broad range of policy and ideological interests.  To Silicon Valley types, basic income can prepare for technology-driven labor displacement.  To some liberals, basic income combats poverty and rising inequality.  To others, a sense of utopian curiosity wants to see what happens when, unbound by scarcity and the grind of eking out a living, individuals can flourish to become their best selves, freed to pursue their passions, ideas, and humanitarian instincts.  And to conservatives, a basic income can elegantly replace most of the welfare state altogether.

As interesting as a basic income may be, it’s undoubtedly a politically farfetched scheme for the United States in the near future, to say the least.  But can we seize the principles of a basic income to take incremental steps to help those who would gain from it the most?

I’ve argued that those who support a basic income should make providing a child allowance to families with children one of their top priorities.  Children are entirely morally blameless for their poverty, and poverty holds back their academic achievement, making a mockery of the American ideal of equality of opportunity.  They also stand to gain the most from living in households with more money.

And among children, the youngest are likely to substantially gain the most from more income support.  In Congress, Rep. Rosa DeLauro has introduced a bill to create a new Young Child Tax Credit to provide relief to families with children under three years old, recognizing both that families need support during this special (and costly) time in their lives, and that young children would benefit immensely from extra resources.

The Empirical Case for a Young Child Allowance

The strongest empirical case for boosting the household incomes of poor kids comes from a 2014 paper by Greg Duncan, Katherine Magnuson, and Elizabeth Votruba-Drzal.  Reviewing the evidence, Duncan et al. conclude that “children from poor families that see a boost in income do better in school and complete more years of schooling.”

Duncan et al begin by reminding us of the long-lasting destructive consequences of child poverty.  Some 16 million American children live in poverty—more than one in five.  And the disadvantages to a child growing up in poverty reverberate for a lifetime, suppressing her years in school, halving her earnings in her 30s, slashing the hours she’ll work as an adult, increasing the odds of her landing on food stamps in adulthood, and raising her likelihood of ill health.  Growing up in poverty doubles the probability of young boys being arrested during their lives, and it quintuples the odds of teenage pregnancy among girls.

Poor children enter school behind their peers by the time they are in kindergarten.  On every basic metric, low-income children face a yawning gap between more privileged children, from recognizing letters to counting.  Poverty thus strongly appears to impede child development early in life.

Duncan et al explore three different explanations for why poverty hinders development: family and environmental stress; resources and investment; and culture.  Under the family and environmental stress theory, poor households face a mountain of constraints and limits that produce harmful stresses.  Parents contend with economic pressure and are forced to cut back on basic essentials.  This pressure causes psychological stress, producing depressive and hostile feelings.  This psychological stress can also distort decision-making and render parents less able to pursue long-term goals.  Financial scarcity creates marital tension and tends to lead to developmentally harmful parenting techniques.  And of course, economic scarcity leads to a whole host of bads, like dilapidated housing, dangerous neighborhoods, struggling schools, and exposure to pollution.  Studies show that when children are chronically exposed to elevated stress levels, the region of their brains responsible for self-regulation suffers.

Under the resources and investment theory, poor parents are too crunched for time and money to fully invest in their children.  Because of their parents financial constraints and work obligations, poor children “lag behind their wealthier counterparts in part because parents have fewer resources to invest in them.”  Poor parents are more often at the mercy of inflexible and irregular work hours, making it harder to make time for their children.  And poor children are exposed to far fewer enrichments like books, computers, and camps than wealthy children—an inequality that has grown substantially over the last forty years.

Under the culture theory, the structural impediments from living in poverty produce maladaptive norms and behaviors in individuals, which are then transmitted to children and cause another generation of poverty.  In this view, poverty and the welfare state inadvertently promote single motherhood, male joblessness, and increased crime.  A “culture of poverty” also influences parents to focus on keeping their children safe, regulating their behavior, and enforcing discipline, whereas better-off parents focus on letting their children grow and flourish.

Scholars like William Julius Wilson have pushed back against the cultural explanations of poverty, showing, for example, that poor women strive for marriage and motherhood, but run up against high rates of male incarceration and unemployment that make marriage unattainable or less desirable in practice.  Others acknowledge the role of structural social and economic factors, but aim to impart middle-class norms and behaviors to low-income children in order to compensate for the apparent political and cultural immovability of entrenched poverty.

While poverty is abhorrent at all ages of childhood, Duncan et al show that it’s most destructive at the earliest ages.  “[D]uring early childhood,” they explain, “the brain develops critically important neural functions and structures that will shape future cognitive, social, emotional, and health outcomes.”  Poverty gravely interferes with this development.

Duncan et al point to the famous high-quality childcare studies demonstrating the importance of the earliest years of life.  The long-term benefits to at-risk children placed in high-quality care in the Abecedarian and Perry Preschool programs show that infancy and toddlerhood are fruitful points to make positive interventions in a child’s development.

Next, Duncan et al evaluate the empirical evidence for boosting family income to help child development, focusing on experimental and quasi-experimental randomized studies from policy changes and pilot programs.  Between 1968 and 1982, six towns across the United States experimented with a negative income tax, essentially a basic income-style precursor to the modern Earned Income Tax Credit.  Studies measuring outcomes for children receiving these benefits found significant achievement gains for children in elementary school, but no corresponding impact for older children.  The studies did not measure the effects in early childhood.

Welfare reform in the 1990s, which encouraged parents to work and thereby increase their incomes, also provided an opportunity to study the effect of income gains on poor children.  Studies found that when welfare reform’s wage supplement programs took effect, children in early elementary school scored significantly higher on achievement tests.  In fact, a $3,000 increase in annual income was associated with an achievement gain of one-fifth of a standard deviation for these children.  Again, however, no gains were seen among older children.

Between 1993 and 1996, Congress greatly expanded the generosity of the Earned Income Tax Credit, which rewards work among long-income families.  Researchers found that the expansion of the EITC coincided with improved academic achievement among low-income children between the ages of 8 and 14.

In Canada, researchers studied the impact of variations between provinces in the country’s national child benefit on test scores.  Among children between 6 and 10 years old, more generous benefits were associated with both higher math scores and a lower likelihood of receiving a learning disability diagnosis.  There were also signs of gains among younger children, particularly boys.

Last, in North Carolina, a tribal government opened a casino and began paying $6,000 to each member of the tribe every year.  A study found that children in families receiving these casino payments had increased school attendance rates and were more likely to graduate high school.

Duncan et al conclude that these experimental and quasi-experimental studies suggest that elementary school-aged children have the highest academic gains.  Gains among adolescents were more muted, but did boost educational attainment like increasing years of schooling and high school graduation.  The authors noted that few of these studies estimated the impacts of higher family income during the early childhood period.

Duncan et al also point out that in the non-experimental Panel Study of Income Dynamics, researchers found that among families earning below $25,000, an annual boost to household income before their children turned 5 was associated with increased working hours as adults, increased earnings, and lower rates of food stamp receipt.  Older children saw no statistically significant impact.

The authors then examine the policy implications of these findings.  “If the evidence ultimately shows that poverty early in childhood is most detrimental to development during childhood and adolescence,” they posit, “then it may make sense to consider income-transfer policies that provide more income to families with young children.”  They specifically suggest creating more generous supplements to the EITC and/or the Child Tax Credit for families with young children—essentially the proposal introduced by Rep. DeLauro.  This mirrors the strategy adopted by several European countries like Germany and France that offer age-dependent income subsidies for families with young children.

It would also draw on the conditional cash transfer programs like the EITC and other programs in the developing world that give cash grants to individuals who engage in beneficial behavior, like working.  In New York City, the Bloomberg administration tested a Family Rewards program from 2007 to 2009, which gave cash incentives to promote a host of work, education, and health goals.  While the program lifted significant numbers of New Yorkers out of poverty, it failed to boost the academic achievement of elementary or middle school students.  However, the program was weighed down by a confusing multitude of incentives and irregular payments.  Family Rewards 2.0 is now underway in the Bronx and Memphis, Tennessee.

Finally, Duncan et al conclude by warning that the policy implications cut both ways: just as young children would gain from policies that boost household incomes, they would also suffer from policy choices that slash incomes and in-kind benefits like food stamps—the kinds of cuts pushed by Speaker Paul Ryan and other congressional conservatives.

Social Security for the Young

A young child allowance, or some permutation of it, would be a confluence of several of the principles animating the push for basic income.  For progressives, a young child allowance would combat inequality and poverty among the most vulnerable Americans.  For techies, it would invest in the faculties of young children to some day dream up the next frontier of innovation.  If Social Security for the elderly is a reward for a life’s work, “Social Security for the young” is an investment for future productive years to come—a pair of policies nicely bookending the life cycle.

While it would be wonderful if Congress saw the light and quickly passed Rep. DeLauro’s young child tax credit, Washington gridlock makes that a virtual impossibility in the near term.  And sure, if you squint hard enough and suspend some disbelief, you can see how a President Hillary Clinton’s childcare reform plan could morph into a quasi-child allowance through negotiations with congressional Republicans.  But I’m not holding my breath.

In the meantime, then, policy experimentation around this issue will need to take place at more local subsidiary units of government.  As I’ve written, this could take the shape of a child allowance with or without conditions: “One could imagine an enterprising city, school district, or even a well-funded and ambitious charter school trying out an initiative that (1) provides each family with a monthly ‘scholar success stipend’ for each of their children, and (2) conditions receipt of a full payment on children meeting certain basic expectations in school.”

This would seem like a particularly apt place for adventurous charter schools, whose appeal stems in part from their ability to innovate around providing added resources for low-income children, like highly-paid teachers and wraparound social services.  Why not try providing income support, too?

So the socially impactful venture capital firms and non-profits of the world should step up and partner with a town or a network of schools to see what happens when families with poor children suddenly get more money.  As the empirical evidence shows, these experiments should foremost target the youngest children who will reap the greatest developmental gains.  Just as a childhood in poverty can reverberate for decades, so too can a childhood of ample means — one that allows children to be children, to develop and thrive.  That’s an investment that would truly transform our society, and would be a big legitimizing down payment toward a basic income for all.

 

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3 thoughts on “The case for a children’s basic income

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