A newly released randomized controlled trial (RCT) from the Baby’s First Years study (BFY) has prompted questions about the value of child cash transfers in improving child outcomes. While the findings are noteworthy, they must be interpreted with care and contextualized within a much larger, more robust body of global and U.S. evidence. At scale, unconditional cash transfers to families—especially those with young children—have consistently been associated with reductions in poverty, food insecurity, and improvements in health, family well-being, and child development. This new small study sits within this much larger body of evidence.
The Global and Domestic Evidence Is Clear
Over 70% of countries provide some form of child allowance—many of them unconditional and universal, serving as a cornerstone of social protection for families with children. Global studies repeatedly find that these transfers reduce child poverty, food hardship, and improve child and maternal health. Research finds that impacts can be especially strong when the cash is provided early in life, such as a study published in the Quarterly Journal of Economics found that a $1,300 investment in the first year of life led to substantial improvements in adult earnings and educational attainment.
In the U.S., the 2021 CTC expansion gave most families monthly cash payments of $250–$300 per child. Research has since found that the expanded CTC contributed to:
- A large drop in child poverty to the lowest level ever recorded
- A record drop in food insecurity among families with children in 2021
- Improvements in household material well-being and financial security
- Positive impacts on parental mental health
- Increased parental investments in children—more educational materials and childcare spending
Taken together, these findings represent a robust and growing body of evidence about the positive effects of child cash transfers at scale.
Understanding the Baby’s First Years Findings
The Baby’s First Years study is the first RCT in the U.S. to test the effect of a modest, unconditional cash transfer for infants and toddlers. Beginning in 2019, 1,000 low-income mothers in four U.S. cities were randomized to receive either $333/month (treatment group of 400 mothers) or $20/month (control group of 600 mothers) for the first few years of their child’s life. Babies who were admitted to the NICU, and thus more likely prone to developmental delays, were excluded from the study.
BFY researchers have found some encouraging results: treatment group parents invested more in their children, with more time reading and playing, and purchasing more books and toys. According to the researchers, “[e]stimates on time spent with children in early learning activities are similar in magnitude to the effects of more costly and intensive direct early literacy interventions on increased time spent reading among comparable populations of 3–4 year olds residing in families with low income.” Researchers found the BFY benefit reduced poverty and public benefits utilization while having minimal impact on employment. Findings also indicate improvements in consumption of fresh produce. While the study group saw large reductions in food insecurity during the years of the significant COVID era stimulus help, so did the control group over the same time period. The most recent release from the study found no significant differences in child development outcomes at age 4.
This last finding has prompted some to wonder about the efficacy of cash transfers altogether—but such conclusions ignore context and scale.
The Cash Transfer Was Likely Too Small to Move Developmental Outcomes
The BFY cash transfer of $333/month was modest, especially when compared to the 2021 expanded CTC, which averaged $500/month for many families. Moreover, the BFY amount was not adjusted for inflation after enrollment began in 2019, and has lost over 20% of its purchasing power over the study period.
With any intervention, such as a pharmaceutical or therapy, dose matters. When transfer amounts are too small—especially in high-cost environments—they are less likely to shift measurable health or developmental outcomes.
The design of BFY also was a means-tested program. Families were recruited based on having income below the poverty line. Some evidence indicates that means testing can lead to stigma and mitigate the efficacy of assistance.
A Highly Distorted Policy Context: The Pandemic Years
The BFY intervention unfolded during a time of unprecedented economic disruption and large-scale government support. Both control and treatment groups had access to multiple rounds of pandemic stimulus payments, expanded unemployment benefits, and, eventually, the expanded CTC. For some families the pandemic cash aid could easily reach well beyond tens of thousands of dollars.
The broader environment makes it extremely difficult to isolate the impact of the $333/month transfer. At a time when child poverty fell to a historic low and cash was flowing broadly, there are reasonable questions about whether the marginal impact of a modest intervention could lead to impacts on some outcomes.
Meanwhile, this was a uniquely challenging period for the development of young children. Pandemic‑related disruptions, from social isolation to loss of early learning, created headwinds that no small transfer could fully overcome.
Limits of RCTs in Social Policy Research
RCTs are considered the gold standard for causal inference, but they have important limitations when applied to complex social and public health interventions. Economists like Nobel Laureate Angus Deaton and Nancy Cartwright have highlighted how RCTs often prioritize internal validity at the cost of external relevance. In the BFY example, sample selection limits the generalizability to urban families with incomes below the poverty line. In addition, Deaton and Cartwright highlight that:
- Most RCTs are underpowered to detect spillover or general equilibrium effects.
- They are often conducted with convenience samples, limiting generalizability.
- They rarely capture long-term outcomes—especially for young children.
In terms of spillover effects, a widely cited RCT in Kenya found that giving $1,000 to one-third of households in a village generated multiplied economic gains across the community. These types of community-wide effects are impossible to measure in small RCTs in high income settings, like the U.S.
The Benefits of Research on Population-Level Programs
To understand how child cash transfers work at scale, we must also examine quasi-experimental studies of national or regional policies. These designs may lack random assignment, but they more accurately capture what happens when entire populations are supported.
Importantly, many interventions widely accepted as successful—such as early childhood education, access to health insurance through Medicaid, or large scale tutoring programs—have rigorous evaluations showing mixed or no effects. Yet population-level data reveal that, when designed well, such interventions lead to lasting improvements in health, economic stability, and academic achievement.
Rx Kids: A Community-Wide Model Designed for Impact
One such scaled initiative is Rx Kids in Michigan—the first community-wide prenatal and infant cash transfer program in the U.S. Rx Kids is not an RCT. It was built explicitly to apply the best global and domestic evidence at the population level.
What makes Rx Kids different:
- Universal: Every pregnant person and infant in an Rx Kids community is eligible, regardless of income.
- Earlier Start: Cash begins in mid-pregnancy ($1,500 lump sum), a critical window for fetal development.
- Higher Amounts: $500/month for 6-12 months after birth—designed to be large enough to matter.
- Better Data: Evaluation focuses on population-level outcomes using administrative data. Rx Kids impact findings here.
Rx Kids aims not just to evaluate whether cash works, but how unconditional support can shape the future of an entire community.
Conclusion
The Baby’s First Years study is an important addition to the literature on child cash transfers. But it is just that—one small study implemented during a historic economic and social upheaval, and offering modest support. It should not overshadow decades of research showing that meaningful support to families improves the well-being of children and their communities.
Across the political spectrum, there is growing recognition that raising children is expensive—and that our public policy should reflect that. The 2021 expansion of the federal Child Tax Credit (CTC) lifted millions of children out of poverty and brought the child poverty rate to a historic low. That policy was championed by Democrats, while Republicans such as Senator Mitt Romney proposed their own versions of child allowances. More recently, the Trump Administration floated a $5,000 “baby bonus”, and Vice President Kamala Harris had proposed a $6,000 newborn tax credit. In line with peer nations, supporting families with young children financially is emerging as a national bipartisan priority.
The question is no longer whether policymakers should support families—it is how best to do it at scale, with equity, dignity, and science at the center.
Learn more about null and negative results from U.S. cash programs from Rx Kids partner, GiveDirectly.