Stimulating Better Health

Of the socioeconomic status indicators pertaining to health research, household or family income has become recognized as increasingly important.  A growing body of literature suggests that children living in low-income households are negatively impacted for the period of time during which a family is poor.  This impact has lasting effects: as children are still in a critical stage in their brain development, children living in poverty are more likely to see lower educational and earnings potentials than their more affluent peers in their adult life, as well (Duncan 2012). 

Other research explores the relationship between recessions and health status (e.g. Ruhm 2000). When the Great Recession began in 2007, many people took a large hit in their wage income. At the same time, automatic stabilizes in the form of government transfers alleviated some of the financial burden placed on these households. In July 2009, the American Recovery and Reinvestment Act was enacted into law, providing stimulus aid in the form of food stamps, extended unemployment insurance and other income supports for families in need. 

To the extent that it can assuage low income families, public policy has been a key lever used to narrow the health and educational achievement gap between children born in poor families and children born in affluent families.  For example, in investigating the effect of food stamps on health, a study by Hoynes and Schanzenbach (2009) finds that, among nearly identical communities, food stamps given to one community positively impacted children’s health during the time of administration and further positively affected their socioeconomic indicators, such as earnings potential and long term health decades into the future.  Studies on other policy levers have had similar effects. In investigating the increase in the maximum amount of the Earned Income Tax Credit for families in the 1990s, several studies found that infants born to mothers with the maximum EITC had the greatest improvement in overall birth indicators including the mother’s health (e.g. Hoynes et al 2013) relative to families that received less than the maximum amount of benefit.

This paper investigates who was impacted by the welfare programs implemented by the ARRA, and in particular, how many children benefitted from the transfers. Given the importance of transfer income and the purported benefits mentioned above, we measure the magnitude of the health outcomes of children who received ARRA supplements, using both the Survey of Income and Program Participation and the Supplemental Poverty Measure within the March Current Population Survey. Further stimulus was cut short by the austerity movement in the nation.  In addition to measuring the effects of ARRA, this paper investigates the hypothetical situation in which ARRA’s stimulus continued through 2014, to see whether children could have benefited more and in the future, if the additional stimulus could help to curtail the forecasted scarring of the generation affected by the Great Recession.