tv Public Investment Anti- Poverty Transfers CSPAN January 25, 2017 2:25pm-3:13pm EST
we have more now from this brookings institution forum. we will hear from an economics professor on her research on the short and long-term impacts of anti-poverty transfer programs on children and families. >> now we will turn to the investment -- this is a very good environment for trying to undertake investments, that will raise future living standards. you know, everybody thinks investment means roads and bridges.
education people think, of course we have bridges and education that are both human capital. this is about, well maybe some of the things that we think of as just spending to help people out, you know, maybe if they go to low income families they actually might have quite powerful effects on the future. that's what we will explore here. this is thinking about transfers to low income families and what impact they might have and what does the research say about the impact they have on future living standards on growth. so we will invite kristin to come up. then greg duncan will respond. then we will have a discussion. thank you so much. >> thank you. hello. i'm kristin butcher. i'm going to talk about assessing long run benefits to transfers to long-term families. we are used to thinking of
infrastructure in research or where there are upfront costs. there's a nice picture of the big dig from my neck of the woods in boston. looks costly. but maybe long-term benefits in terms of capacity or helping workers to get to their jobs and goods to get to market, there's a picture of it looking a lot more productive capacity like. but we're really not used to thinking of transfers to low income families in that way. mostly we think, i'm here to tell you, children are cute, and their suffering is acutely painful to watch, so we think of the transfers of something as incurs and making sure that suffering is not too acute. but could these be thought of as investments in human capital? do transfers to low income
families actually change the productive capacities that children in those families attain when they become adults. and in this way are they then viewed like the other investments as something with an upfront cost but maybe a long term benefit and maybe a benefit greater than those cost. these are certain domains of investments that we might or transfers that we might think about and think about what's the scope for these to be actual investments. this helps buffer from financial strain and the related stresses there. things like food and nutrition programs, biggest one of which would be the snap program. supplemental nutritional assistance program. and of course it provides more resources more generally. we also might think about health
insurance. that insures or potentially insures access to health care and those things can prevent or treat ailments as they arise and provides more resources. finally, housing the is the other domain i will talk about. that might insure no asbestos or lead paint in the walls. and that leads to a better neighborhood. this shows there is a link of better environments and later outcomes. people break this down into different periods. the in utero period. the neonatal period may be for the different types of capacities or just a place where there might be sensitivities and there for those developments might be malleable, capacities might be malleable at those point.
and earlier childhood and later childhood. and researchers tied these things to different types of capacities that seem to be developed at each of these point. so the fundamental architecture we carry around with us seems to be developed quite early. things that are insult to the fetus quite early seem to show up at a fairly profoundly later this life. cognitive skills are shown to be malleable pretty early in childhood and noncognitive skills are malleable later through adolescent development. i must have been cold when i was doing this because it is all about sweat gland. basically this is from james barker and it basically illustrates that we're all born with approximately the same number of sweat glands and in that zero to three age if you're in a warm climate you develop the capacity to use them more.
if you're in a colder climate, you don't. and then ever after, if you are somewhere else, can you cool yourself down if you are raised in that hotter environment. people think there are many other capacities of human development that might be malleable in this way. there is starting to be a large body of literature that ties certain stimuli at different points in development to these later in life capacities. there is a huge literature about the fetal hypothesis. this goes through different types of stimuli. nutritional insults that might happen. infectious disease, maternal stress. i don't have time go into the details, but i love the details. but all of these are sort of mounted on a really rigorous platform of trying to find out when there is a group that is a treatment group and control
group. so you're not just saying, is it bad for your mom to be in an earthquake when she is pregnant with you? i think we all think, yeah. i don't need to be that convinced. but i'm trying to find a group that is really similar but doesn't have that same stimuli. this group is very largely compelling that something happens. and later in life using these rigorous plat forms that there's a connection between what happens early in life and later. and it is plausible that poverty can affect nutrition, disease
and stress in ways that could be in utero and later in childhood. can transfers meaningfully alter these environment in a way that can effect these long-term capacities. then the follow-on question of that is of course, are those benefits that are going to accrue down the line greater than the cost in that upfront investment. parents might undo the transfer in some way so they might reduce labor supply if you give somebody a dollar, they might work a dollar less. it depends what they do with their time. it might look like you don't do very much because of the available resources to the household will remain relatively unchanged. i'm talking theoretically at the moment there is a large and vast empirical literature that tries to look at all these links. so lots and lots and lots of research.
are in kind transfers the same as cash? that depend entirely on what the family would have done if they had cash. so if a family gives that child a vaccine and they were going to give the child the vaccine anyway then you give them cash. there is also correspondingly vast literature are what are the labor supply effects of these transfers. how do you summarize economics? the rest is commentary. but then also a question as to how much do they respond. and if you're interested i will refer you to these volumes. i think in the interest of time i will skip ahead.
here is just one example as to why we might there are big labor supply effects and other effects. this is the big picture. there is family income measured as a percent of the poverty line and on the vertical access is the share of children covered by health insurance. the pink line is 1987 and at the top in teal, i believe that is, we have 2012. what we see is that with the expansions in medicaid and state children's health insurance program we are doing away with that enormous dip that happened right around the poverty line in 1987. and somebody like an incentives mastermind to think that maybe family approaching that cut-off point and are worry about
covering that children with health insurance might have had labor supply effect and the literature that exploits that across states and over time find that low income women are more likely to work when their children are not going to leave being insured as they do that. so these are offsetting effects but also maybe the case that low income families, parents build more capacity through working, learn on the job and if you're not working then you're kept that way and potentially even worse, maybe there's an intergenerational transmission of welfare dependency. right? we're starting to see some really interesting results coming out of the scandinavian countries. social scientist are pining for the fjords these days because
they have rich data across generations and across massive data sets that allow us too get into this. there is evidence that when the family of origin has access to say disability insurance and if this case, that the later generation is more likely to participate in that and it is based on random assignment and judges adjudicating those cases. pretty good evidence it is causal. now what are the challenges to us understanding the long-term effects of the safety net that we have? there are two sources of those challenges. one is data and one is that correlation is not causation. which i think is in my economist license that i have to mention that whenever i can. on the data front, if we want to see the long-term impacts across a range of these domains, we will have to wait until people
are age 25 to look at completed education. something completed fertility, age 35 to 40 perhaps. peak earnings, something in 45 to 50 range. so if you just look at this brief start data, big kinds of programs, only two of those up there are older than i am. and so, hopefully we will have to look for a while to see the impact on mortality. then the other issue, if we have data that happened to you to connect when you are young, we need to worry, why did you get that? it's not enough to say, you've got to transfer when you were young and therefore and now you know you are doing better or worse because we don't know why the people got that transfer. we need to have some way of saying, is this person doing better than they otherwise would have and that's why we need the
micro economist tool kit which really consists of randomized control trials, flip a coin, you get it, you don't. differences and differences where we leverage the fact that a lot of times these policies are rolled out over different geographies, over time and we can say, hey, the people in this state can stand in for what would have happened to these people had they not gotten access to this program. i won't talk about regress, just continuity design. okay, in the 2:04 i have left, i will talk about these very recent research papers i have that go back to the dawn of the safety net. what impacts do these have on the children's long-term capacities. interestingly in the last year there have been papers that come out across all four different domains.
all of these are based on a really rigorous research design where there is plausible treatment and control groups. can you plausibly say this is the effect of the program. this reaches back to the mother's mention program in 1911 to 1935. they look at people who applied for this program, all these people declared themselves to be in need. eligibility was you had to be low income or widow or having been abandoned by your husband and you had to have children. they look many years later at people who received it and the people who initially screened as being eligible but then for some reason along the way it was discovered they had more resources so they were not eligible and they make comparisons. you can see a cross a large number of domains they find the people who received this compared to close matches who did not are doing better than a lot of domains. diane is here in the audience. there is a lovely paper by her and hillary and doug almond who looks at the official roll-out
of food stamps and s.n.a.p. though can look at that with people who had food stamps and compare that to the people with less time covered. they have look at the 0 to 5 sensitive period and that 0 to 5 years improved health, and economic self sufficiency. there are two new papers on health insurance. one leveraging expansions we saw on the graph about in 1980s and 90s comparing across people what did and didn't expand and they have linked that to irs records and found that medicaid eligibility for children increased income and payroll taxes paid. decreased eitc receipt. decreased mortality by age 28, which is not when we think people will be dying. still, it's noteworthy.
and raise the likelihood of going to college by age 22 for women. they are able to do a cost benefit analysis that could suggest that government will recoup about 56% of every dollar spent by the time they reach 60. i will skip over this one but this looks at the very beginning of the medicaid program in the 1960s so we can see people a little bit older an there are dramatic impacts that there is a 7% return on investment. finally housing. there is one long-term study that is a follow-up to the moving opportunity study. the moving topportunity had a group who had section 8 vouchers and were allowed to take those to find their own housing. another group had to go to low poverty neighborhood and had to have counseling to do that.
following these folks up now, which some are in young adult hood, the researchers have found that the people who are under 13 when they were randomly assigned have quite striking beneficial outcomes. and interestingly people over 13 do not seem to have these kinds of outcomes. we are able to do a cost benefit analysis that if a child had two young children the increase and earnings and taxes from the earnings will pay for the program in the long run. so in conclusion, the research from this is sort of dawn of the social safety net programs is just starting to come out. using rigorous methods to correlate between causation and really meshes quite nicely with this other literature growing
about why the early childhood period might in fact be so sensitive and so important to invest in. and we are not always able to say in a really tightly specified cost benefit analysis that are the benefits greater than the cost and sometimes the best we can do is ask the question if the person got this are they doing better. so we are a long way from really understanding a dose response and being able to rank all of these in terms of what is exactly the most productive. but those things that indeed are able to do a cost benefit analysis show cost benefit returns. this is always open to critique. that was then. this is now. would we get the same benefit if we increased benefits. i will leave you with saying that in my neighborhood, in massachusetts, there's no evidence that parents think for their owner children that were at the flat of the curve. in terms of their own selves
investing in childhood. thank you. [ applause ] >> it just showed up on the screen. there we go. i'm greg duncan from university of california irvine. i'm visiting this year with the russell sage foundation in new york city. it is a pleasure to be here. i don't have big comments about the paper, just suggestions. so let me get started. the paper makes this point and kristin did too. this is not about labor supply. labor supply is a second order of order of concern on this paper. is to what extent the transfers have impacts years and decade
ahead on the children growing up and families receiving transfers. kristin highlighted growing evidence from in utero biology about the importance of early life experiences. in utero as well as the first few years. long lasting impacts of these programs. and to paraphrase studies of long-term effect of cash transfers, food stamps and so forth show long-term health and attainment. it looks like the timing of receiving the transfer matters a lot, with earlier being better. there are tricky policy implications and i want to think about those and finally i'm not
quite as sold as kristin is about the robustness of the literature. but we will talk about that. so when the transfer is received seems to matter a lot. she talked about paper by diane and doug almond. this is my candidate best map ever of the united states. it is not red and green. not red and blue. it's green. and it is this paper that tries to show the way the food stamp program rolled out in the 1960s and 1970s. usually when a program rolls out it come out at the same time nationally or in an entire
state. in the case of food stamps, it was county specific. dark green show says counties that and you see a lot of states and in the south appalachia where counties behave very differently within the same state. you could literally have kids born on the same day, in the same state, and in one county has food stamps well before the baby was conceived and another might be in a neighboring counties where food stamps didn't begin until the child was age 3 or 5 or 7. we take advantage of the timing of when that was rolled out. with respect to the birth date. and then look 20, 30, 40 years later to see whether the timing of that roll out seemed to correlate with health and
economic self sufficiency. so this paper enables you to track year by year according to the time when food stamps are introduced into the county. this is oriented toward exactly that. on the left-hand side, you have kids whose -- who are conceived in counties where food stamps were aren't there. as you move right, food stamps began later and later with respect to the food birth year. this is as specs of metabolic syndrome. that is bad. it is indicative of cardiovascular problems. this is taking kids, early
middle childhood to almost adolescence as comparison group. let's consider their scores to be zero, the reference group. and we want to see what respect you had metabolic rates. higher or lower relative to this group of kids. and introduced in middle child mood. minus point 5 at the beginning is half a standard deviation lower on this metabolic syndrome forward and so forth. this is a dramatic relationship at the age in which food stamps was received relative to a birth year. so way off to the left kid were in counties that already had food stamps years before they were conceived had .4 standard deviations of metabolic syndrome 30 years later and as you get closer and closer to the birth year that starts to increase and early childhood that increase was more. so the later the introduction of
food stamps, the worse off the child was 40 years later in terms of health. the worse off the child was in terms of economic self sufficiency is the other thing looked at. this is about the potential importance of transfers early in life. and it is really mirrored by a number of other studies. that kristin reviews. where the evidence seems to point to benefits when the income is received relatively early in life compared to later in life. if you look back to income tax experiments there was evidence to that effect where there was achieve and effect not
universally across sites but by and large impacts of negative income tax payments to kids. can it be larger the younger the children were. welfare work experience in 1990, same thing. tended to be positive impacts when the kids were just making transition from school or even negative impacts when welfare boosted work and family income when kids were older. same result with cheddy. kristin talked about that. the opportunity to move to section 8 voucher when the child was 13. then health insurance is the same thing. there is a healthy amount of literature when the child is under 13. kristin talked about the evidence to that effect. it is a much broader set of things as well. the family is a you will important. schools haven't kicked in. neighborhood effect haven't kicked in.
careers are in their youngest stages. family income is the lowest. and finally, early on, parent are most overwhelmed and least mature. at least able to handle the burdens of parenting. when there is this assistance early on in life for variety of reasons you can imagine the impacts being larger. if that the case, there are policy conundrums. wic is directed towards young kids but by and large we don't differentiate our transferred programs according to the age of the children. if we think that transfers benefit families with young kids more than they do, older kids, maybe we should add a supplement to the income tax credit in the case where families have young kid or think about taking the
existing pot of money for the itc and reallocating it so that families get larger benefits when they have younger kids and relatively smaller benefits when they don't. and section 8, evidence is for positive impacts when the kids are under 13 years old. but coefficients are negative. do you set up a voucher so it only provides eligibility for families when they've got young kids. some families have kids younger than 13, too. we need to think about how policy needs to address this problem that there seems to be more benefits, more positive in early years. and so i took issue a bit with the strength of kristin's conclusion. about the remarkably consistent evidence. if you just take section 8 for example, raj chedy did find these uniformly positive results but uniformly negative results for the kids who are older than
13. mto, an experiment that involved families living just in public housing and very high poverty neighborhoods. not universal section 8 program at all. and in fact there's another evaluation of the broader section 8 program in chicago. brian jacob that doesn't find benefits. little bit at younger ages. so i would be a little bit more circumspect in the scope of the conclusions. then i've got some other comments that i'll provide to kristin. so that's it. thank you very much. [ applause ] >> thank you very much. i wanted to say, we had two papers written for this conference.
kristen and sarah turner. they're both on our web site if you want to get them and have a wonderful discussion of the evidence and sources of many studies. so if you want to learn more, that's a great place to go. >> so one of the reasons we did this conference is it seems to be, i'm not an expert in this field but the evidence is getting more compelling that a lot of these programs really, oops, sorry, do have a long-term effect and should think of them as having a large investment component. is that basically right? are we there yet? >> my takeaway is that i would
still stand by the idea that there's remarkable consistency with the neurobiological evidence of these early interventions and across these things that are evaluating the role out of the dawn of the safety net that there are these long-term impacts. so i do think that the evidence is quite significant and quite consistent. i will just answer your question about the jacobs paper. the mtl is important and not just about housing but changing people's neighborhoods. so it's probably closer to basic science than it is this is how you roll out a policy because as you said, what do you do with families with a 13-year-old and a 2-year-old, right? that's hard for policy makers, but i think it tells us the environment changes a lot and the evidence from the jane goode all paper is that it's hard to find a place to live in a different neighborhood. so i think as policy makers and
thinking about policies, you do want to think about what would families do if you just gave them cash and if you want to change their behavior even more, you'll have to think about what are the places where they wouldn't be able to do the same thing with cash? so health insurance, health insurance on the private market. give people health insurance other than just giving them cash. teaching people about the importance of the environment and how you move to a different environment or how you improve the environment. that's probably going to give
you something different from cash. that part is speculative. >> i'm a believer, to the extent that i've invested the last four years of my life in trying to set up rct that would -- okay, i'll talk louder. trying to set up an experiment that would enroll mothers, poor mothers who had just given birth into two groups, either getting $4,000 a year for three years or not and then it's a collaboration with neuroscientists who try to see what extent kids' brains get wired up differently as a result of cash transfers. you know, we can also add to the list that kristen talked about. we spend $100 billion a year almost on child allowance. it's embedded in our tax system
as a child exemption, right? child tax credit. the additional child tax credit. you add it up and it's $96 billion a year. it's paid annually instead of monthly. it's paid in recognition of the fact that families with kids have greater needs for income. and yet, families who have no taxable income get nothing. so if you really think about a more reasonable approach, it would be more along the lines of a universal child allowance where you don't condition it on taxable income. and we're hoping that our rct will be funded if people have a final formula for the 4 million, we'd appreciate that but i think the strength of the evidence that kristen reviews is such that the weight of the evidence is probably in favor of thinking that these cash transfer programs do have a component that's benefiting kids perhaps in the long-term. >> well, let's think about going beyond some of these cash programs and think about universal basic income or something. so you think about those. a lot of people say that's a real waste because you're going to be giving money to everybody with kids or every family to make sure there's some minimum
and a lot of people don't need it. but then you start, but then you do, you don't have to worry about labor supply effects. so when you look at the research that you're doing, it seems like it was mostly the income that mattered. how do we think about whether or not the programs would be even more effective if we didn't worry about labor disincentives? >> yep, that's a good question. i think that mostly labor supply disincentives are something that we should worry about that much when we're looking at these programs for low income children. >> should or shouldn't? >> should not. i think we should try to make sure they have the basic things that they need and be willing to save some times on labor supply, but the evidence does not suggest that the labor supply effects offset the investments we're trying to make. >> well, yeah. and we need to worry about the cumulative effect of marginal tax rates growing higher and higher. on average, tax rates about 33 cents on the dollar. and make sure when we do put in place a whole set of programs that they don't end up with very high marginal tax rates and very substantial labor market
disincentives. >> there's a huge political emphasis on work. we're always thinking about getting people to work as being sort of primary. there's too much emphasis? it used to be the idea of giving these subsidies to mother was something that didn't have to work and could stay at home with kids. do you think the politics have gotten it wrong? and is it because they don't think about the importance of these early years. is that something that's made its way into the public consciousness or not yet? >> i think that there are different people who react in different ways, and some are quite capable of going off and getting a job and mostly, we see from welfare reform that children don't do better if the parents just get a job and that total resources stay exactly the same. there needs to be some supplementation there. what are the long-term
consequences of that families learn on the job and have wages grow over time? i don't think we know the answer to that but i'm somewhat suspicious. >> it's such a difficult thing to orient a political discussion away from labor supply toward anything else. throughout the welfare reform debates of the 1990s, i was trying with a bunch of other people to provide research and arguments about consequences for kids, right? and back in the welfare reform days, there were diametrically opposed positions on what welfare reform would do for kids. patrick moynihan said we're putting children to the sword, they'd be sleeping on grates and other people would say, well,
the parents are working. it's going to be a positive role model and a good thing for kids. but despite those predictions, there was absolutely no content in the debate over welfare reform that was focused on kids at all. it was all focused on labor supply and if you think about a few years ago and debating cutting food stamps. i think this time when we talk about the safety net changes that we'll be making in light of tax cuts, all the rhetoric is going to be around hammocks and lazy parents and nothing is going to be about potential consequences for kids. >> i think what you're going to hear in that debate too is what you always hear. it's been a complete failure, hasn't gotten rid of poverty, high as it ever was. so how do we take the evidence that these have long important effects and counter that the war on poverty has been a failure? >> i don't think there's evidence of that. if you look at what happens after you do the transfers, i think the point of the transfers, poverty has fallen
quite a lot. i think that would be a misreading of the evidence to say there's been no effect on poverty, but i think the debate will be about labor supply effects and i think by reading of the evidence would say it should be about what did children need at critical times of a development in order to affect their capacities as adults. we're running a great risk if we don't let them have the things they need as they develop. >> during the welfare debate, there really wasn't that much evidence that could be debated, right? about impacts on kids. i think what kristen's paper shows is the last five to ten years, there's been an explosion, a very interesting
careful studies evaluating the impact of these various programs that is really starting to put on the table pretty strong evidence with regard to the impacts on kids for later life outcomes. now, we can choose to ignore that information, but at least it's there and much stronger than it used to be. >> so i want to ask you, if you were going to increase spending, what might you choose, but i think also, let's look at the other way, but what are the things we should be most worried about being cut going forward if we're going to be worried about long-term impact on kids? is there any way so i know that the evidence isn't quite there to say, they get some medicaid or housing or is there anything there to think about in terms of ranking? >> i would think health insurance. health insurance is tricky because you don't expect immediate impact from health. right? that's stock, not a flow. and you have to have something go wrong with you that health care could have either prevented or ameliorated before you see
the effects of health insurance but these longer term studies do seem to show that expanding medicaid had a first order effect of allowing children to have more medical care and a better coverage and these long-term impacts say that had a big impact on both health and productive capacity. so those are things it's quite hard for families to buy on their own even if you were to give them cash. >> so there's health and everything else. i think the everything else can be lumped together in terms of what's happening to the aggregate resources made available to low income. >> we just want to care about the total. >> we have time for a few in the audience. can you stand up and hit the gentleman in the purple tie? say where you're from please. >> independent consultant. question to kristen and anybody else. any specific reason you didn't include head start and a comparison of head start as a baseline with taught experiment if you had to show $10 billion? >> i guess the reason i didn't include it is because i thought it had been really well covered
in other places and these other programs had relatively less coverage. >> george freelander. a suggestion that has a question, i'll make it quick. a lot of the work being done on technological change and its implications for the wage side as opposed to the labor side talks about income supports as a part of the solution. so that drags this into the more modern era and i'd love to hear your response from that. >> let's take this question. >> mostly for greg duncan. you seem to be more willing than i seem to be willing to redirect some of the current safety investments from older children to younger children.
so i want to ask you or push you to think about how we think about the short-term impacts versus long-term impacts. i think that's based on long-term impacts but i think short-term impacts, for example, if a 15-year-old isn't getting enough to eat, he might do other things that are socially problematic in a way that a 2-year-old wouldn't. so how do we think about those? >> even for short-term impacts, especially achievement, school achievement, right? and to some extent social behavior, right? the evidence is still fairly, in
the way that we package assistance, welfare foods. we lump together cash programs with incentives that change labor supply, right? and one of the things that discovered in the 1990s was when you both increase work and income, you had these positive impacts for the younger kids, right, and you had negative impacts for the older kids in part because with the parents working, the kids were, the teenage kids were stuck caring for their younger siblings. and that interfered with school work and so forth. and you've got, right, these dramatic differences between benefits depending on the age. i'm not saying illuminate when you redistribute and cut it out completely but it's usually the preponderance of the evidence that suggests reading somewhat more with young kids makes sense. >> i don't think we answered the question about changes in technology. and i think that, you know, we're in a brave new area where the robots may be coming for us all and to the extent it's
harder to get a job in the low wage labor market, these may be more salient issues. >> concerned about the technological changes that makes a powerful case for the more important topic than it ever was. >> i think the measure of a good panel is, should it go on forever? probably is that this room is committed at the end of the program this afternoon, so we can't go over too long. so first of all, i want to thank kristen and greg for fitting more information into the time we allotted than i thought was humanly possible. it's extremely efficient. join me in thanking them. so we have a challenge. we have half an hour for lunch. there are sandwiches in the room on the other side of the aisle here, paper plates and some sandwiches and some tables in
there. you're free to sit there if you can find a seat. free to bring sandwiches in here. and drinks in the back of the hallway out here, and so we're going to reconvene at 1:15, so please eat fast. at the brookings ibs tu institution forum we also heard from an economics professor in education. this is about 50 minutes.