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How does income affect mental health and health behaviours? A quasi-experimental study of the earned income tax credit
  1. Laura Shields-Zeeman1,2,
  2. Daniel F. Collin1,
  3. Akansha Batra3,
  4. Rita Hamad1,4
  1. 1Department of Family & Community Medicine, University of California San Francisco, San Francisco, California, USA
  2. 2Netherlands Institute for Mental Health and Addiction, Utrecht, The Netherlands
  3. 3Department of Epidemiology & Biostatistics, University of California San Francisco, San Francisco, California, USA
  4. 4Philip R. Lee Institute for Health Policy Studies, University of California San Francisco, San Francisco, California, USA
  1. Correspondence to Dr Laura Shields-Zeeman, Family and Community Medicine, University of California San Francisco, San Francisco, California, USA; lshields-zeeman{at}trimbos.nl

Abstract

Background Although research has repeatedly demonstrated the association between poverty, mental health, and health behaviours, there is limited evidence on the effects of interventions to improve these outcomes by addressing poverty directly. Moreover, most prior studies are often confounded by unobserved characteristics of individuals, making it difficult to inform possible interventions. We addressed this gap in the literature by leveraging quasi-random variation in the earned income tax credit (EITC)—the largest US poverty alleviation programme for families with children—to examine the effects on overall health, psychological distress, smoking, and alcohol consumption.

Methods We used a large diverse national sample drawn from the Panel Study of Income Dynamics (N=34 824). We first conducted ordinary least squares (OLS) models to estimate the association of income and the EITC with the outcomes of interest. We subsequently employed a quasi-experimental instrumental variables (IV) analysis—in which EITC refund size was the instrument—to estimate the effect of income itself.

Results In OLS models, higher income was associated with reductions in psychological distress, increased drinking, increased smoking, and more cigarettes per day, and larger EITC refunds were associated with reductions in psychological distress. In IV models, higher income was associated with decreased psychological distress.

Conclusion These results suggest that typical correlational studies of the health effects of income may be confounded, although results may not generalise to income distributed in different ways than the EITC. The findings also provide valuable information for policymakers and researchers seeking to address socioeconomic disparities in mental health.

  • mental health
  • health
  • poverty
  • policy

Data availability statement

Data are available in a public, open access repository. The source data for this study are publicly available from the website of the Panel Study of Income Dynamics, https://psidonline.isr.umich.edu.

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Data availability statement

Data are available in a public, open access repository. The source data for this study are publicly available from the website of the Panel Study of Income Dynamics, https://psidonline.isr.umich.edu.

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Footnotes

  • Twitter @shieldsy_, @DrRitaHamad

  • Contributors RH conceived of the study. LS-Z, DC, and AB contributed to data cleaning and analysis. LS-Z created the first draft of the manuscript. All authors contributed to interpretation of the results, critically revised the manuscript and approved of the final version.

  • Funding This work was supported by grants from the UCSF Hellman Fellows Fund, the UCSF Irene Perstein Award and the UCSF National Centre of Excellence in Women’s Health. The collection of Panel Study of Income Dynamics data used in this study was partly supported by the National Institutes of Health (grant number R01HD069609 and R01AG040213), and the National Science Foundation (award numbers SES 1157698 and 1623684).

  • Disclaimer The study funders had no role in study design; collection, analysis and interpretation of data; writing the report; and the decision to submit the report for publication.

  • Competing interests None declared.

  • Provenance and peer review Not commissioned; externally peer reviewed.

  • Supplemental material This content has been supplied by the author(s). It has not been vetted by BMJ Publishing Group Limited (BMJ) and may not have been peer-reviewed. Any opinions or recommendations discussed are solely those of the author(s) and are not endorsed by BMJ. BMJ disclaims all liability and responsibility arising from any reliance placed on the content. Where the content includes any translated material, BMJ does not warrant the accuracy and reliability of the translations (including but not limited to local regulations, clinical guidelines, terminology, drug names and drug dosages), and is not responsible for any error and/or omissions arising from translation and adaptation or otherwise.

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