In Saturday's New York Times, by Moises Velasquez-Manoff published "What Happens When the Poor Receive a Stipend?" It tells the story of what happened to the lives of the Eastern Band of Cherokee Indians after they opened a casino in the Great Smoky Mountains in 1997. Admittedly, this is because the casino made a profit, but the lessons learned by scholars from Duke, the University of North Carolina at Chapel Hill and UCLA who studied the Cherokees have significant implications for why Lyndon Johnson was right to enlist government forces to combat poverty.
This is Harrah's Cherokee Casino, which opened November 13, 1977 on the Cherokee reservation.
We are all aware that the establishment of Indian casinos, as provided for in the Indian Gaming Regulatory Act of 1988 has been good for the Indian nations that have opened them. But the quantitative information detailing the social consequences of "having been good" and its impact particularly on children have not been widely disseminated, and that puts us at a disadvantage when we try to explain why something like welfare works. Fortunately, the announcement that this casino would be built spurred action among academics:  
Jane Costello, an epidemiologist at Duke University Medical School, saw an opportunity.The tribe elected to distribute a proportion of the profits equally among its 8,000 members. Professor Costello wondered whether the extra money would change psychiatric outcomes among poor Cherokee families.
When the casino opened, Professor Costello had already been following 1,420 rural children in the area, a quarter of whom were Cherokee, for four years. That gave her a solid baseline measure. Roughly one-fifth of the rural non-Indians in her study lived in poverty, compared with more than half of the Cherokee. By 2001, when casino profits amounted to $6,000 per person yearly, the number of Cherokee living below the poverty line had declined by half.
The impact on psychiatric outcomes? By 2003, she was ready to publish. The psychiatric community was still debating whether poverty caused mental health problems or vice versa, so her results, she said, surprised her. What she found was that
The frequency of behavioral problems declined by 40 percent, nearly reaching the risk of children who had never been poor. Already well-off Cherokee children, on the other hand, showed no improvement. The supplements seemed to benefit the poorest children most dramatically.
She continued following the children, and the next time she published her results, she found something even more startling: the earlier these payments arrived in a child's family, the better the child's mental health as he or she grew up.
So applying money to the problem of native poverty DOES work as far as native children are concerned. But let's see what an actual Cherokee has to say about this:
Vickie L. Bradley, a tribe member and tribal health official, recalls the transition. Before the casino opened and supplements began, employment was often sporadic. Many Cherokee worked “hard and long” during the summer, she told me, and then hunkered down when jobs disappeared in the winter. The supplements eased the strain of that feast-or-famine existence, she said. Some used the money to pay a few months’ worth of bills in advance. Others bought their children clothes for school, or even Christmas presents. Mostly, though, the energy once spent fretting over such things was freed up. That “helps parents be better parents,” she said.
Quod erat demonstrandum, no? More studies confirm this. The UNC at Chapel Hill's Family Life Project (run jointly with Penn State), which quantifies not just income but neighborhood safety and maternal education, among other stressors, as well, have found in 11 years of research that the stressors are cumulative. Further, parents under stress rarely manage high levels of nurturing. Thus, a theme has emerged:
Early-life poverty may harm, in part, by warping and eroding the bonds between children and caregivers that are important for healthy development.
Why would this be important? Researchers at the Washington University Medical School in St. Louis followed a group of preschool children for the next ten years of their life and tracked the stressful events for each child; MRI scans taken in adolescence showed that early life stress and poverty impeded the healthy development of the hippocampus and amygdala, regions in the brain (the article says, and I'm not a scientist) that regulate memory and emotional well-being.
Naturally, these observational studies don't allow us to assume causality, because they don't solve the chicken-or-egg problems that accompany research into these sorts of issues, especially if they have political implications. To mitigate this, Randal Akee, an economist at UCLA,has calculated
the supplements actually save money in the long run. He calculates that 5 to 10 years after age 19, the savings incurred by the Cherokee income supplements surpass the initial costs — the payments to parents while the children were minors. That’s a conservative estimate, he says, based on reduced criminality, a reduced need for psychiatric care and savings gained from not repeating grades.
What do we know now, when we divorce this from the complicated issue of Indian gaming?Extra money might provide poor children with long-lasting benefits. Admittedly, the Cherokee example might be unique, because the cash supplements came from a business owned by the tribe which had determined how to help its members, and this might avoid incentives not to work. Besides,
about half the casino profits went to infrastructure and social services, including free addiction counseling and improved health care. Ann Bullock, a doctor and medical consultant to the Cherokee tribal government, argues that these factors together — which she calls the exercising of “collective efficacy” — also may have contributed to the improved outcomes. She describes a “sea change” in the collective mood when the tribe began to fund its own projects. A group that was historically disenfranchised began making decisions about its own fate.
Professors Costello and Akee continue to think that cash made the difference, and THAT has social and political implications, because if it DOES, withholding cash that not only helps poor families but also saves society money isn't exactly rational policy. It torpedoes the ideas that if you're poor or if you're sick, you did something to make yourself deserve that.
So use this the next time one of your Facebook friends or your congresscritter or the editorial board of your local newspaper brings up the Hoover-era notions that poverty only happens to people who deserve it and that the last thing government should do is to alleviate poverty. Not so, says legitimate research. This also supplements the arguments for Indian gaming with the knowledge that the benefits gaming provides the tribes with are positive for society.
UPDATE: Despite what I said in the last sentence, this diary is supposed to be about the public policy implications of these studies in terms of the value of welfare and cash in alleviating the social problems caused by poverty, not an assessment of the ways in which people in poverty should get the cash.