Cash Transfers, Mental Health and Agency: Evidence from an RCT in Germany

Abstract

Mental health and wellbeing are unequally distributed in high-income countries, disadvan- taging low-income individuals. Unconditional, regular, guaranteed, and individual cash transfers may help address this inequality by promoting financial security and agency. We conducted a preregistered RCT in Germany, where treated participants received monthly payments of EUR 1,200 for three years. Cash transfers improve mental health and wellbe- ing substantially, with effects persisting 18 months after the program ended. Cash transfers also improve perceived autonomy, savings, prosocial giving, time with friends, and sleep. Our findings suggest that cash transfers improve mental health and wellbeing if they em- power agency and life changes.