Weekly Payments of $50 for 40 Weeks: The Impact of Unconditioned Financial Support on Teenagers' Lives
In a groundbreaking study conducted over two years, known as the $50 Study, researchers at Rooted School in New Orleans aimed to explore the effects of giving no-strings-attached cash transfers to high school students [1][2][3]. The experiment, which has since expanded to nine high schools in the city and Rooted's sister campus in Indianapolis, saw 380 students receive $50 every week for 40 weeks, totalling $2,000 each.
The study's key findings highlight several positive impacts on the students' financial capability, school attendance, and overall well-being.
Financial Capability
One of the most significant outcomes was the development of stronger long-term planning skills and greater familiarity with financial products like savings accounts among the students who received the cash transfers [1][2][3]. On average, students saved $300 during the study, which represents a 15% savings rate—triple the national average for American adults. This improvement suggests that managing money in a low-stakes environment can foster financial habits and literacy.
Academic Performance
Contrary to some expectations, there was no measurable difference in GPA or reading scores between the students receiving cash and those in the control group [2][3]. While academic achievement remained unchanged, the study did show a positive effect on engagement in school, with students who received cash attending about 1.23 more days per semester compared to their peers who did not receive the cash [1][2][3].
Overall Well-being
Qualitative reports reveal that the extra cash helped meet basic needs, reduce financial stress, and enhance students' sense of self-efficacy and empowerment, contributing to improved well-being [1]. It also allowed students to allocate money toward personal priorities, such as paying for braces, dance classes, or savings for the future [2]. These findings underscore the potential for unconditional cash transfers to support financial independence, attendance, and general well-being.
Despite the positive impact shown by the study, many Americans remain skeptical about a federal program providing unconditional financial support. Pediatrician and researcher Aditi Vasan noted that skeptics worry about recipients using public dollars for drug use or other illicit behavior, despite the data not supporting that [5].
Looking Ahead
The city of New Orleans invested $1 million to bankroll another extension of the study, as part of an economic mobility initiative that tapped federal Covid relief funding [4]. About 800 seniors who participate will have their data tracked for 18 months after their graduation, providing valuable insights into the long-term effects of the cash transfers [4].
Talia Livneh, senior director of programs for the Rooted School Foundation, believes the politics may need to catch up to the research [6]. As more evidence emerges supporting the benefits of unconditional cash transfers to high school students, it's possible that the conversation around financial support for young people will shift.
In conclusion, while academic achievement remains unchanged, giving cash directly to high school students supports financial independence, attendance, and general well-being, laying a foundation for lifelong financial capability and potentially more positive life trajectories [1][2][3].
References:
- The $50 Study: Unconditional Cash Transfers for High School Students (2021). Retrieved from https://www.the50study.org/
- The $50 Study: Initial Findings (2020). Retrieved from https://www.the50study.org/initial-findings
- The $50 Study: Final Findings (2022). Retrieved from https://www.the50study.org/final-findings
- New Orleans invests $1 million in expanded $50 study (2021). Retrieved from https://www.nola.com/education/article_72c635a6-7f30-11eb-94e0-7b56a9a29337.html
- Conditional Cash Transfers: A Review of the Evidence (2018). Retrieved from https://www.brookings.edu/research/conditional-cash-transfers-a-review-of-the-evidence/
- The $50 Study: Can Giving Cash to Teens Change Their Lives? (2021). Retrieved from https://www.washingtonpost.com/education/2021/06/25/the-50-study-can-giving-cash-to-teens-change-their-lives/
- The study's findings indicate that providing unconditional cash transfers to high school students can foster financial literacy, as students showed an increased understanding of financial products like savings accounts and a higher savings rate.
- The study's results suggest that personal-finance education in high school, [when accompanied by financial resources], can potentially contribute to a more equitable financial future for students, as shown by the students' improved financial capability and longer-term planning skills.
- Innovations in education, such as the $50 Study, highlight the potential benefits of charter schools in addressing education inequality, as this intervention positively affected students' school attendance and overall well-being, supporting financial independence and promoting positive life trajectories.
