Monthly Cash Payments Leads to Better Brain Development in Babies, Study Says

It’s a no-brainer that a little extra cash each month can go a long way in reducing stress, especially for parents — just ask everyone who received the Child Tax Credit payments from July to December last year. Additional income provides stability for parents, and can definitely fill in budgetary gaps. This means parents can work fewer hours, pay off debt, buy necessities like food and diapers without straining the budget, or save money for a new home or their child’s education. And these aren’t just conjectures: The benefits of monthly cash payments like Stockton’s groundbreaking Universal Basic Income program or the child tax credit have been well-studied, and they have found that parents, and their babies, benefit greatly from the money mentally, emotionally, and physically.

Any way you look at it, guaranteed additional income is a win-win for parents. But a recent study shows that it’s not just great for budgets or family time. It’s a boon for child development too.

Babies Can Benefit From Guaranteed Income, Study Suggests

A new study shows that babies can benefit from that income boost in a surprising way — through improved brain development. The study, published in the journal Proceedings of the National Academy of Sciences, followed a group of families, half who received $20 per month and half who received $333 per month for one year from the baby’s birth.

At roughly one year of age, the babies were examined using electroencephalography (EEG) to measure brainwaves. Testing was done in the child’s home to avoid any stress from an unusual environment. Researchers found that children from the families who received the $333 per month had more high-frequency or “fast” brain activity — the type of brain activity associated with sensory processing, motor control, attention, and memory. The difference was moderate, about the same statistically as going from the 75th position to the 81st in a line of 100 people, according to the researchers.

We’ve known for a while that children raised in poverty have developmental and structural brain differences from wealthier children, but until now, it’s been a chicken or the egg scenario with researchers and policymakers debating over causation and correlation; does poverty cause these differences, or is it just a coincidence that the two often coincide?

This study, the first of its kind, seems to put the causation vs. correlation debate to bed, as it definitively proves that more money means improved brain development. However, more research is needed to confirm the extent to which poverty affects development and the long-term implications of poverty.

Only time (and more research) will tell if the brain development boost from guaranteed income translates to smarter kids with higher-level skills. But based on the brain activity differences, the researchers do expect this to be the case.

The Study Is Significant as Child Tax Credit Debate Rages On

These findings are especially timely in the wake of the end of monthly Child Tax Credit (CTC) payments for U.S. families and the renewed debate on the necessity of monthly guaranteed income for parents. The debate over an extended CTC program raged in the Senate for months as the majority of Democrats pushed for a continuation of the $250-$300 payments for families per child under the age of 18. As part of President Biden’s hallmark Build Back Better act, an extended CTC would’ve kept millions of children from falling back into poverty — it pulled millions of them out of it in the first place, leading to the largest reduction in child poverty in many years — and provided extra income for parents who struggle to make ends meet.

The CTC program was received with fanfare from people all over the U.S. who said the additional income allowed them to loosen their budgetary belts a little. Research shows that most families used the extra money to buy food and pay for basics like rent and utilities, and pay down debt, not, as one Senator claimed, to buy drugs.

These study findings remind us that poverty eradication is not only good for the economy, but also for our children. Lightening the financial burden on parents provides the kind of trickle-up effect that results in a net positive that could be long-term both on an individual and a national level.