Investment. We have bridge and investment and Human Capital this is about maybe some of the things we think of as just spending to help people out. This is about, well maybe some of the things that we think of as just spending to help people out, you know, maybe if they go to low income families they actually might have quite powerful effects on the future. Thats what we will explore here. This is thinking about transfers to low income families and what impact they might have and what does the research say about the impact they have on future Living Standards on growth. So we will invite kristin to come up. Then greg duncan will respond. Then we will have a discussion. Thank you so much. Thank you. Hello. Im kristin butcher. Im going to talk about assessing longrun benefits to transfers to longterm families. We are used to thinking of infrastructure in research or where there are upfront costs. Theres a nice picture of the big dig from my neck of the woods in boston. Looks costly. But maybe longterm benefits in terms of increasing capacity or helping workers to get to their jobs and goods to get to market, theres a picture of it looking a lot more productive capacity like. But were really not used to thinking of transfers to low income families in that way. Mostly we think, im here to tell you, children are cute, and their suffering is acutely painful to watch, so we think of the transfers of something as maybe incurs and making sure that suffering is not too acute. But could these be thought of as investments in Human Capital . Do transfers to low income families actually change the productive capacities that children in those families attain when they become adults. And in this way are they then viewed like the other investments as something with an upfront cost but maybe a longterm benefit and maybe a benefit greater than those cost. These are certain domains of investments that we might or transfers that we might think about and think about whats the scope for these to be actual investments. Cash provides more resources. Maybe this helps buffer families from financial strain and all the related stresses there. Things like food and nutrition programs, biggest one of which would be the s. N. A. P. Program. Supplemental nutritional assistance program. And of course it provides more resources more generally. We also might think about Health Insurance. That insures or potentially insures access to health care and those things can prevent or treat ailments as they arise and provides more resources. Finally, housing the is the other domain i will talk about. That might ensure no lead paint or asbestos on the walls. And that leads to a better neighborhood. And provides for resources for families. Theres a growing body of research that shows theres a link between early life environment and later outcomes. People break this down into different periods. The in utero period. Which is the fetal origins hypothesis that i will talk about more. The neonatal period may be for the different types of capacities or just a place where there might be sensitivities and therefor those developments might be malleable, capacities might be malleable at those points. And earlier childhood and later childhood. And researchers tied these things to different types of capacities that seem to be developed at each of these points. So the fundamental architecture we carry around with us seems to be developed quite early. Things that are insults to the fetus quite early seem to show up at a fairly profoundly later this life. Cognitive skills are shown to be malleable pretty early in childhood and noncognitive skills are malleable later through adolescent development. I just pulled out a quote that talks about the plas tisity of development. I must have been cold when i was doing this because it is all about sweat glands. Basically this is from james barker and it basically illustrates that were all born with approximately the same number of sweat glands and in that zero to three age if youre in a warm climate you develop the capacity to use them more. If youre in a colder climate, you dont. And then ever after, if you are somewhere hotter you can cool yourself down if you are raised in that hotter environment. People think there are many other capacities of Human Development that might be malleable in this way. There is starting to be a large body of literature that ties certain stimuli at different points in development to these later in life capacities. There is a huge literature about the fetal hypothesis. This goes through different types of stimuli. Nutritional insults that might happen. Infectious disease, maternal stress. I dont have time to go into the details, but i love the details. But all of these are sort of mounted on a really rigorous platform of trying to find out when there is a group that is a Treatment Group and control group. So youre not just saying, is it bad for your mom to be in an earthquake when she is pregnant with you . I think we all think, yeah. I dont need to be that convinced. But im trying to find a group that is really similar but doesnt have that same stimuli. This body of research is largegrowing and very compelling that there is something that happens. There is evidence that even later in life that using these rigoro rigorous plat forms there is a connection of what happened early in life and later. And it is plausible that poverty can affect nutrition, disease and stress in ways that could be in utero and later in childhood. Can transfers meaningfully alter these environments in a way that can effect these longterm capacities. Then the followon question of that is, of course, are those benefits that are going to accrue down the line greater than the cost in that upfront investment. Why transfers might not help these longterm prospects . They may not be meaningful enough to affect the childhood environment. Parents might undo the transfer in some way so they might reduce labor supply if you give somebody a dollar, they might work a dollar less. It depends what they do with that time. It might look like you dont do very much because of the available resources to the household will remain relatively unchanged. Im talking theoretically at the moment there is a large and vast Empirical Literature that tries to look at all these links. So lots and lots and lots of research. Economists are obsessed with two questions. Are in kind transfers the same as cash . That depends entirely on what the family would have done if they had cash. So if you give a child a vaccine and the family would have given them the vaccine anyway you just handed them cash. If you didnt do that then you fundamentally changed something. There is also vast labor supply effects of these transfers. How do you summarize economics . The rest is commentary. But then also a question as to how much do they respond. And if youre interested i will refer you to these volumes. I think in the interest of time i will skip ahead. Here is just one example as to why we might think there are big labor supply effects and other effects. This is the big picture. There is Family Income measured as a percent of the poverty line and on the vertical access is the share of children covered by Health Insurance. The different colors correspond to different years. The pink line is 1987 and at the top in teal, i believe that is, we have 2012. What we see is that with the expansions in medicaid and state Childrens HealthInsurance Program we are doing away with that enormous dip that happened right around the poverty line in 1987. It doesnt take somebody whos like an incentive mastermind that maybe familyets approaching that cutoff point and worrying about covering that children with Health Insurance might have had labor supply effect and the literature that exploits that across states and over time find that low income women are more likely to work when their children are not going to leave being insured as they do that. The other scenario is not only are these offsetting effects, but maybe its the case that lowincome families the parents build more capacity through working and learning on the job and if youre not working youre capped that way and potentially maybe worse theres a transmission of welfare dependency. Were starting to see interesting results. Scientists are pining these days because those countries have this incredibly rich data that are linked across generations and massive datasets that allow us to get into that. Theres evidence when the family of origin has access to disability insurance, in this case, that the later generation is more likely to participate in that and its based on rand yom assignment to judges adjudicating those cases. What are the challenges to us understanding the long term effects of the safety net that we have . There are two sources of those challenges. One is data and one that correlation is not causation, which i think is in my economists license that i have to mention that whenever i can. On the data front, if we want to see the long term impacts across a range of these do domains were going on to have to wait until people with 35 to 40. Youre going to have to wait a long time to see whether these things manifest as having a wide range of benefits across domains. If you look at our big programs, only two of those up there are older than i am so hopefully well have to look for a while to see the impact on mortality. And then the other issue is that even if we had a wonderful dataset that connected what was happening to you when you were young to what your later in lifeolife out comes were we need to say why did you get that. Its not enough to say you got a transfer when you were young because we dont know why people got that transfer and we need a way of something is this person doing better than they otherwise would have. Thats why we need the microeconomic tool kit. Differences and differences where were leveraging the fact that a lot of times these policies get rolled out over geographies over time and say thats in this state can stand in for these people. In the time i have left, ill talk about these very recent Research Papers are going back to the dawn of our current social safety net and saying what do we know about the impacts these have had. Interestingly in the last year there have been papers that have come out across all of these four different domains. All of these are based on a really Rigorous Research design where theres plausible treatment and control groups. You can say you can plausibly say this is the effect of the program. The paper reaches back to the mothers Pension Program in 1911 to 1935. They look at people who applied for this program. They declared themselves to be in need. The eligibility was you had to be low income or a widowed and abandoned by your husband and you had to have children and then they look many years later at the people who received it and the people who were initially screened as being eligible, but for some reason along the way it was discovered they had more resources so they were not eligible and they make comparis comparisons. You can see they find that these people who received this compared to close matches who did not are doing better in a lot of domains. Diane is here in the audience. Theres a lovely paper by her that looks at the initial rollout of food stamps and s. N. A. N. Done county by county and they can look at people who were in koepcounties and got a higher fraction covered by more years and they find people who had more of that critical period in that 0 to 5 sensitive period had improved health in terms of metabolic syndrome and improved economic self sufficiency. There are two new papers comparing across people who were in states who did and didnt expand and theyve linked that to irs records and they found that Medicaid Eligibility for children increased income and payroll taxes paid, decreased eitc receipt and reduced mortality by age 28, which is when we dont think most people will be dying and raised the likelihood of going to college by age 22 for women and they were able to do a cost benefit analysis that suggests the government will recoup about 57 of every dollar spent by the time these people reach 60. This is another one that looks at the very beginning of the Medicaid Program in the 1960s so we can see people who are older and we see dramatic impacts and theres evidence that theres an actual payoff to the government of a 2 to 7 return on investment. Finally, housing. Theres one longterm study thats a follow up to the moving to opportunity study. It randomized people into three different groups, a control group that had business as usual and a group that had section eight vouchers and a group that was told you can have a voucher and they had to move to a low poverty neighborhood and they had counseling to do that. Following these folks up now, which some of them are in young adulthood, the researchers have found that the people who were under 13 when they were randomly assigned have quite striking beneficial outcomes. Interestingly people over 13 do not seem to have these kind of outcomes. Were able to do a cost benefit analysis if the person had two Young Children the increases in those earnings are going to pay for the program in the long run. So in conclusion, the research from this sort of dawn of the social safety net programs is just starting to come out. Its using really rigorous methods to try to distinguish between correlation and causation and it really meshes quite nicely with this other literature thats growing about why the Early Childhood period might in fact be so sensitive and important to invest in. We are not always able to say when a really tightly specified cost benefits analysis are the benefits greater than the cost. Sometimes the best we can do is ask did the person get this and are they better. Were a long way of being able to rank these in terms of what is the most productive, but those things that indeed are able to do a cost benefit analysis seem to show striking concerns. This is open to the critique that was then and this is now. Would we get the same benefits if we increased benefits and i will leave you with saying that in my neighborhood in massachusetts, theres no evidence that parents think for their own children that were at the flat of the curve in investing. Thank you. Im visiting this year in new york city and its a pleasure to be here. I dont have big comments about the paper. Just some suggestions. Let me get started. The paper makes this point and kristen did too when we think about transfers were obsessed with labor supply. This is not about labor supply. Labor supply is really a second order concern in this paper. It is about to what extent the transfers have impacts years and even decades ahead on the children growing up in the families that are receiving the transfers. Kristen highlighted the growing evidence about the importance of early Life Experiences in uttero as well as the first few years. There are long lasting impacts of a number of these different perhaps and to paraphrase studies of the long term effects of Cash Transfers, food stamps and so forth show remarkably consistent evidence of Long Term Health and attainment. My comments are as following. I want to say it looks like theres something here. It looks like the timing of when the transfer is first received appears to matter a lot with earlier being better. If timing matters, then there are some tricky policy implications and i want to talk about those. Finally, im not quite as sold as kristen is about the robustness of the literature, but well talk about that. So first two points, looks like somethings there and whats there seems to indicate that when the transfer is received appears to matter a lot. She talked about the paper by hillary and diane and doug. Map of the united states, this is my candidate best map ever of the united states. Its not red and green. Its not red and blue. Its green. And it is this paper that tries to take advantage of the way in which the Food Stamp Program rolled out in the 1960s and 1970s. All right. Usually when a program rolls out it comes at the same time nationally or it comes in an entire state. In the case of food stamps it was county specific. So the dark green shows counties that adopted food stamps later in this 20 year period. The lighter green earlier. You see a lot of states, especially in the south where counties behaved very differently within the same state. You can have kids born on the same day living in the same state a few mielles apart where one was in a county that had food stamps well before the baby was conceived and another might be in a neighboring county where food stamps didnt begin until the child was age 3 or age 5 or age 7. Were able to take advantage of when the timing of that food stamp was rolled out with respect to the birth date to and then look 20, 30, 40 years later to try to see whether the timing of that roll out seemed to correlate with health and economic self sufficiency. This paper enabled you to track year by year, according to the time when food stamps were introduced into the county. So this is oriented toward exactly that. On the lefthand side you have kids who were conceived in counties where food stamps were there and as you move to the right food stamps began later and later with respect to the birth year. So just to set things, this is an index of metabolic syndrome. Its bad to have metabolic syndrome. Higher scores are bad. This is just taking the kids who are early, middle childhood to almost add less ens as comparison groups. Lets consider their scores zero and we want to see to what extent you had metabolic syndrome rates that were either higher or lower relative to this group of kids who were in counties where food stamps were introduced in childhood. This is a standardized scale so the minus. 5 is lower on this metabolic syndrome and so forth. What does the line look like. Its a very dramatic graded relationship between the age at which food stamps was received relative to a birth year. So way off to the left kids who were in counties that already had food stamps years before they were conceived had. 4 standard deviations lower levels of metabolic syndromes 30 years later and as you get closer and closer to the birth year, that starts to increase and then Early Childhood it increases more. So the later the introduction of the food stamps, the worse off the child was 40 years later in terms of health. The