How Would Americans Respond to Direct Cash Transfers? Results from Two Survey Experiments

The Earned Income Tax Credit (EITC) provides substantial financial support to low-income Universal basic income has gained renewed interest among policymakers and researchers in the U.S. While research indicates that unconditional cash transfers produce diverse benefits for households, public support lags in part due to the predicted unemployment and frivolous spending. To understand how Americans would reorganize their lives around unconditional cash transfers, this paper examines the relationship between the structure of cash transfer programs and their usage. We leverage experiments embedded in two novel, nationally-representative surveys to assess the relationship between the frequency of payments, their amount, and respondents’ anticipated usage. Though the survey experiments presented very different scenarios to survey participants, we saw largely consistent responses. Respondents most commonly reported they would use their payments for regular expenses, paying down debt, and building savings. Increased payment amounts were positively associated with spending on economic-mobility oriented goals, durable goods consumption, and balance sheet improvements, while increased payment frequencies were negatively associated with expenditures in these areas.