We find that the cash increases possibilities to, as one participant eloquently put it, “Dream bigger. Do more. Consider more.”
In the social sciences, agency refers to someone’s ability and resources to think about, plan, and pursue goals in ways that align with one’s values and desires. The amount of agency a person has is in part determined by the resources available to them and barriers in their path. At the start of the study, participants living in privation reported persistent stress due to numerous barriers they faced: unmet needs, unstable living conditions, and untenable jobs, to name a few. These barriers limited some participants’ sense of agency not only to pursue their goals, but to formulate goals altogether. The immediate demand to meet one's basic needs and survive left little time, energy and emotional bandwidth for future thinking and planning.
The unconditional cash had a positive and significant impact on budgeting and planning for the future, the desire to pursue further education, and interest in entrepreneurship. It increased recipients’ agency to form these goals and take steps toward achieving them.
Compared to control participants, recipients were, on average, significantly (5%) more likely to say they have a budget and significantly (8%) more likely to report planning for large expenses. Recipients also reported spending significantly more time on finances— roughly 20 minutes more than control participants each month. The below visualization shows the estimated effect of the cash on monthly time use.
Living paycheck to paycheck, some recipients had never had the opportunity to budget or spend time planning their finances prior to receiving the monthly cash transfers. They were barely making ends meet. One recipient, Jeremiah, told us this was the first time in his life he had money to budget and it changed his outlook on financial planning. “When I first [saw] the thousand come, it changed my whole perspective…I'm gonna take this as a sign that I need to get more, I need to lock in.” Though $1000 per month was not enough to provide Jeremiah with financial stability, he felt it gave him a foundation to learn how to manage money—something he felt would benefit him even after the transfers ended.
By the end of the program, recipients were significantly more likely (6 percentage points) to report plans to pursue further education. This is a 15% increase compared to the average control participant. Recipients also reported a significant increase in their desire to plan for the future.1
For some recipients like Paloma, the additional money not only increased the possibility to think about the future and plan for school, it allowed them to actually pursue further education. We find modest increases in enrollment in education and training programs or degree completion.2 Across the full sample, recipients were significantly more likely (3.3 percentage points) to have pursued education or job training during the final year of the program—an increase of 14% relative to the average control participant.
The effect was greatest for recipients who had the lowest household income at enrollment: these individuals were, on average, 34% more likely to have participated in education or job training during the third year of the program compared to control participants.3 One recipient Chelsea, who used the cash to support her educational goals said, “Being told that I was about to get a thousand dollars a month for three years was life-changing…it really felt like I was getting a scholarship to help support me while I was trying to get into grad school. In grad school it provided a cushion where I don't know how I could've done grad school without this money.”
Cash is only one piece of the puzzle, and the impact of the cash varies based on recipients’ unique circumstances.
The cash increased the possibility of forming goals and taking steps toward achieving them, but some participants were better positioned to make progress toward those goals than others.
For example, on average, recipients had significantly more interest in entrepreneurial activities, and also appeared more likely to have an entrepreneurial mindset.4 They were 3 percentage points more likely to report having an idea for a business compared to control participants. This effect grew over the course of the program, reaching 5 percentage points by the third year — an 8% increase over the average among control participants. However, for the average recipient we do not find a significant effect on actually starting a business. Yet we do find a significant impact on starting a business for Black and female recipients. By the third year, Black recipients were 9 percentage points more likely to report ever starting or helping to start a business—an increase of 26% compared to the average among Black control participants. Descriptively, in the third year of the study 43% of black recipients report starting a business compared to 34% of their counterparts in the control group.
Black entrepreneurs remain underrepresented in comparison to the overall Black population, due largely to a lack of start-up funding.5 While Black entrepreneurs apply for business loans at a higher rate, they receive funding at significantly lower rates compared to their White counterparts. Although we do not see an effect on starting a business for the average recipient, our findings suggest that the cash transfer payments may have served as viable substitutes for conventional loans for Black recipients.
Similarly, female recipients were 5 percentage points more likely to report having an idea for a business, and in the third year of the program they were 5 percentage points more likely to report having started or helped to start a business (an increase of 15% relative to average control participants). Descriptively, in the third year of the study 36% of female recipients report starting a business compared to 31% of their counterparts in the control group. For female recipients who often grapple with unequal caregiving duties at home, the cash may have increased the possibility of starting a business, offering them valuable flexibility. One single mother, Yasmin, started a financial services business. She told us, “I'm able to be in control of my own time instead of someone having to find something for me. Say for instance [my kids] are sick, and need me to stay or something like that, I don't have to worry about missing work to where I would lose my job.” We asked respondents who reported starting new businesses, what types of businesses they started. The below visualization shows some recipient responses.
Though we find a significant effect on starting a business for Black and female recipients, the significant effects for the average recipient are limited to entrepreneurial interest and mindset; we do not see an impact on actually starting a business. The cash transfers may have given recipients space to formulate ideas and consider opportunities that seemed impossibly remote in the past, but it may not be enough to allow most people to take the steps necessary to turn their ideas into businesses. For many, It is an important, albeit insufficient piece of the puzzle.
Historically, critics of unconditional cash transfers contend that providing individuals money with no strings attached will induce complacency and deter people from setting and pursuing goals. Looking across these findings—the increased planning, future thinking, budgeting, and educational aspirations among recipients—rather than complacency, we find cash increases agency. Though some participants were better positioned to actually achieve their goals within the study period than others, the newfound sense of possibility was evident in many conversations with participants.
One recipient, Kendra, said it best: “I feel more in control of my destiny. Because of not only the additional income, but the consistency of the income, it allowed me to plan, to forecast, to dream, to achieve things that I thought I wouldn’t be able to achieve because I couldn’t see beyond them financially.”