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Helping Actually Can Hurt, New Study Finds

A new report asks: Is it better to have received government aid than never to have received at all?

In the early 2000s, the British government conducted a randomized control trial to see whether government intervention could help the poor. One group of single mothers, all unemployed or underemployed, received no aid. They were the control group. Another set got tax-free work incentives and job coaching. That was the treatment group. The experiment lasted 3 years—and the result was remarkable.

The group that received aid reported much lower levels of well-being. They were less happy with their lives and filled with worry over their finances. And that’s true even though they came away with higher earnings than the group that received no aid. This finding dovetails with John Ifcher’s work on single mother’s happiness after the 1996 passage of welfare reform in America. As the authors find, “Helping people apparently hurt them.”

[pq]The poor flourish when they can move out of welfare and beyond a dependence on government.[/pq]

Why was this the case? The study’s authors blame the unfounded hope that aid provided: “[T]he removal of temporary state benefits hurts asymmetrically more than the initial gain from those benefits.”

The subsidies undoubtedly encouraged poor, single mothers to take up work and left them better equipped financially. Yet when the aid ended, so did their aspirations. They tasted a better life only to have it torn away.

The authors also questioned the usefulness or adequacy of the job training offered. Perhaps it wasn’t much good. Like learning to ride a bike, you want a good teacher before you take off the training wheels.

Yet, I think this study is only scratching the surface. Being poor means more than simply lacking money. It’s a state that’s mired in brokenness and embedded in society. Cash and coaching only go so far. That means restoring and developing the poor into right relationship with the assets around them, starting with community.

This report also appears to bolster the case for earned success as a source of happiness.  The poor flourish when they can move out of welfare and beyond a dependence on government. That’s true even with a set of policies ostensibly aimed at encouraging work. Just ask single mothers in Britain.