Pandemic Stimmies Had No Lasting Effect On Poor: Study
Despite doling out nearly $1 trillion in stimulus payments during the pandemic, government aid had virtually no long-term impact on the financial well-being of recipients, and in some cases it amplified feelings of economic distress surrounding money, Bloomberg reports, citing a new study published Tuesday.
A survey of more than 5,000 Americans living in poverty conducted by Ania Jaroszewicz at Harvard University’s Institute for Quantitative Social Sciences found that stimulus checks increased expenditures for a few weeks, but the extra money had no long-term impact on either spending or savings.
"These results suggest that the cash allowed participants to spend more money, improving objective financial outcomes for the few weeks immediately following the transfer and then dissipating thereafter," the researchers concluded.
The survey covered three groups: the first received a one-time payment of $500, the second got $2,000 and the third nothing.
In the two weeks following the payment, the first and second groups spent $26 and $82 more per day on average, respectively, compared with the control group. Both groups also had higher bank balances immediately after getting the money. Expenditures and bank balances returned to levels similar to that of people who received no payment about four weeks later. -Bloomberg
Meanwhile, those who received stimmies also did worse on financial psychological and health measures in the survey - consistent with the notion that when one receives some money, but not enough, makes the general shortfall in personal finances more pronounced for low-income individuals, causing distress.
"These results hint that while the cash did not actually produce worse outcomes in some objective sense, in some situations it made recipients feel worse," wrote the authors.
Those who received stimulus payments generally used them to make debit and credit card payments, pay bills, buy food, shop and fund transportation according to the report. The checks, which came over three rounds, ranged from $600 to $1,400 for each adult and $500 to $1,400 per qualifying child.