Fear No More: The Reality of Direct Cash Transfers
Despite what some politicians may think, research suggests people spend federal cash transfers on food, rent, or bills—not drugs or alcohol.
Read Time: 2 minutes
Published:
- Policies for federal cash transfers face criticism from legislators who fear people will spend no-strings-attached cash on “temptation goods” like drugs and alcohol.
- People primarily use government cash support for food, rent, or medical bills.
Even a small amount of extra cash can go a long way for American families struggling to pay health care bills or put food on their tables. Direct cash transfers from the government, such as the stimulus checks offered during the COVID-19 crisis, are effective tools to partially alleviate the everyday stresses of poverty. However, such policies face strong criticism from legislators who fear people will frivolously spend no-strings-attached cash transfers on alcohol and drugs. Some politicians across the United States and internationally argue that the possibility of increased spending on these so-called “temptation goods” puts the entire population at risk for substance-related injuries and deaths.
Ruby Steedle and colleagues examined patterns of injury and death following government cash transfers in Alaska to better understand the population health outcomes associated with receiving a direct cash transfer. Regardless of income, nearly all Alaska residents receive an annual lump sum of roughly $1,000 to $2,000 in cash from Alaska’s Permanent Fund Dividend. The researchers analyzed data from the Alaska Trauma Registry and the Health Analytics & Vital Records Section to identify injuries and deaths across the state between 2009 and 2019.
As the figure below shows, injuries and deaths did not spike in the month following each annual cash transfer. Deaths from unnatural causes, such as suicides, homicides, and accidents, remained stable after cash transfers as well, suggesting acute substance-related harms did not increase with an influx of cash.
Although this study did not look at specific purchases, the findings are aligned with international research that shows people primarily use government cash transfers for food, rent, or medical bills. They rarely spend those funds on drugs and alcohol.
Steedle and colleagues urge policymakers to heed the available evidence on the proven benefits and absence of harms associated with direct cash transfers. Politicians who continue to cite the potential of “unfavorable choices” as reasons to limit welfare in the U.S. may simply be fear-mongering.
