Cash Transfers Fail?

Kelsey Piper reports

Kelsey Piper writes¹,

Homeless people, new mothers and low-income Americans all over the country received thousands of dollars. And it's practically invisible in the data. On so many important metrics, these people are statistically indistinguishable from those who did not receive this aid.

Then Piper goes on to write,

Winning the war on poverty will require more than just transfers, it will require building and improving institutions that provide education, health care and housing.

That is a non sequitur. We have spent trillions of dollars on education, health care, and housing, but nobody does rigorous studies of whether they work. Piper writes,

Many of the people working on guaranteed income chafe at the fact that their programs can be criticized for not measuring up, precisely because they conducted high-quality studies in the first place! “When we look at every other anti-poverty regulation, we don't test it with this level of rigor,” Castro pointed out to me.

Right. And why is that? Programs that provide in-kind benefits create political constituencies who have an interest in making sure that you don’t evaluate whether they work. Farmers and others in the food industry don’t want you to know whether food stamps work. Home builders and others in the housing industry don’t want you to know whether housing subsidies work. Health care providers don’t want you to know whether subsidies for health care work. Teachers unions don’t want you to know whether education subsidies work. Non-profits that sponge off government programs to help the homeless don’t want you to know that those programs don’t work.

The problem with just giving cash to poor people is that no one else gets targeted benefits from that. So nobody objects to studying whether those programs work.

The problem of poverty in the United States is difficult because it is concentrated in people who are far from the middle of the bell curve in terms of their ability to take care of themselves. Sam Altman’s sister has spent time on the streets and in degraded conditions. Is that because she lacked for support? Her parents were affluent, and long before Open AI Sam became extremely wealthy. I am sure that they have spared no expense trying to treat what one can only assume is her mental illness. She exemplifies that intractability of poverty.

That is not to say that we should give up on trying to alleviate poverty. But I doubt that there is some wonder cure out there that we have somehow overlooked. And throwing more trillions at education, health care, and housing using the intention heuristic as the only evaluation tool is not going to get anywhere.

substacks referenced above:

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Giving people money helped less than I thought it would

1. She is part of a new, well-funded center-left substack.