A new study of the Alaska Permanent Fund Dividend (PFD) program shows that an additional $1,000 PFD decreases the probability of an Alaskan child being obese by as much as 4.5 percentage points, translating to about a 22% reduction in obesity.
“If we extrapolate our findings to the Alaska population, we find that 500 cases of obesity were averted from a total of 2,230 due to a $1,000 PFD payment,” according to co-author Mouhcine Geuttabi, associate professor of economics and faculty at the University of Alaska Anchorage’s Institute of Social and Economic Research (ISER).
“Using a simulation exercise, we find average medical-cost savings to be $2 to $10 million, which works out to between 20 and 92 cents per PFD dollar by the age of 17,” he added.
In their recently published paper, “Universal Cash Transfers Reduce childhood Obesity Rates,” Guettabi, Brett Watson, post-doctoral researcher at ISER, and Matthew Reimer, associate professor of economics at ISER, find that the effect of the PFD is nonlinear in household income. Middle-income households ($25,000-$75,000) are particularly responsive, while there is no detectable response from high-and low-income households. Middle-income households accounted for 40% of the sample size, with $45,000 being the average income.
The PFD, established in 1982, is the world’s only continuous universal income program, providing a unique opportunity for understanding how unconditional universal basic income may influence well-being.
The study covered children born between January 2009 and December 2011 and observed the PFD application status of each child in each year between birth and a three years of age. The PFD payments studied are those nominally assigned to the child. The authors suggest that this labeling effect may induce parents to spend this cash disproportionately on the child relative to other sources of income.
Between 2000 and 2016, the average PFD size per-person was $1,600, representing 6.28% of overall household income in Alaska. In an earlier study, ISER researchers found the income effect of the PFD causes mothers to reduce their hours in the labor force, enabling more maternal time with children. Studies have shown that maternal job loss can improve child health, including lowering childhood obesity rates.
Several studies have found that conditional cash transfers improve health and nutritional outcomes for children in early life. It is likely that these benefits are achieved in part due to the conditions imposed by the program.
Reductions observed in this study are a byproduct of an unconditional cash transfer and not one of its stated goals. Medical cost savings estimated are considerably larger than those found in most school interventions but much smaller than the ones obtained from sugar sweetened beverage excise tax, and nutrition standards.
The authors conclude that an unconditional basic income provides the possibility of improving children’s health, which can have long-lasting monetary and non-monetary benefits.
“Universal Cash Transfers Reduce childhood Obesity Rates,” by Brett Watson, Mouhcine Guettabi, Matthew Reimer, April 15, 2019, SSRN (Social Science Research Network).