I know the headline is fairly obvious, but sometimes we need to repeat the obvious these days. A new study by Hilary W. Hoynes, Douglas L. Miller, and David Simon finds that something as simple as giving money to low income families has an immediate, clearly measurable effect in infant health. To be more precise, mothers that receive a tax credit through the EITC program give birth to healthier babies (PDF):
Using tax-reform induced variation in the federal EITC, we examine the impact of the credit on infant health outcomes. We find that increased EITC income reduces the incidence of low birth weight and increases mean birth weight. For single low education (<= 12 years) mothers, a policy-induced treatment on the treated increase of $1000 in EITC income is associated with 6.7 to 10.8% reduction in the low birth weight rate, with larger impacts for births to African American mothers. These impacts are evident with difference-in-difference models and event study analyses. Our results suggest that part of the mechanism for this improvement in birth outcomes is the result of more prenatal care and less negative health behaviors (smoking).
Families with more money in their pockets spend more in prenatal care, leading to less negative health behavior. Who would have thought.
The matter is, needy families are usually well aware on what they need; they just can´t afford it. It is always easy to pick specific cases of low income families being spectacularly irresponsible with their money, but more often than not when someone receives extra cash they will use it in a way that makes sense.