Child allowances are a winning investment
The United States does not currently guarantee income support universally to families with children, despite income being an important driver of children’s wellbeing and eventual long-term success. Research finds that cash and near-cash benefits increase children’s health, education, and future earnings while also decreasing costs with respect to health, child protection, and criminal justice.
We find that child allowances are a winning investment in our children’s future mobility. While the initial costs may appear large, they are small compared to the very large monetary benefits that would eventually accrue to recipients and society from investing in children. The value to society that flows from these impacts is approximately ten times the annual costs: converting the Child Tax Credit to a child allowance would cost about $100 billion and would generate about $1 trillion, or about $10 for every dollar spent in benefits to society.
The Benefits and Costs of a U.S. Child Allowance
Garfinkel, Irwin, Laurel Sariscsany, Elizabeth Ananat, Sophie M. Collyer, Robert Paul Hartley, Buyi Wang, and Christopher Wimer. 2022. The benefits and costs of a U.S. child allowance. Journal of Benefit-Cost Analysis, 1-28.
doi: 10.1017/bca.2022.15
These results have been updated since the release of the original paper. Under the updated methods, the net social benefits of a child allowance would increase, giving us a cost-benefit ratio of 1 to 15.