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
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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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.
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