Child Tax Credit & Mental Health
The CTC improved the mental health of adults in the lowest-income families
By: Akansha Batra, Kaitlyn Jackson, and Rita Hamad
Date: January, 2023.
A recent paper in Health Affairs found that the 2021 Expanded Child Tax Credit, which provided monthly payments to U.S. families during the Covid-19 pandemic, improved the mental health of adults in the lowest-income families.
Rita Hamad is an associate professor at UC San Francisco’s Institute for Health Policy Studies. The expanded Child Tax Credit is still a hotly debated policy. From July to December 2021, the expanded CTC provided up to $3,600 per child, disbursed as automatic monthly payments rather than as an end-of-year tax refund. Research suggests that the expanded CTC reduced child poverty by half, and also reduced food insufficiency. But researchers had not yet looked at mental health––what Hamad called a “clear health outcome” that can change and be measured more quickly than other health outcomes.
Hamad told the Institute for Public Accuracy today: “We were trying to understand the effects of the 2021 expansion of the Child Tax Credit on mental health––specifically on the mental health of low income families. We did in fact find reductions in anxiety and depressive symptoms, and we also found larger reductions in mental health problems among Black and Hispanic families. This wasn’t surprising,” given that racial and ethnic minority groups were at increased risk for chronic stress during the pandemic.
Mental health was thus a “secondary benefit” of the expanded CTC. By improving parents’ mental health, the policy also “improves the environment that kids grow up in.”
Hamad emphasized that the Household Pulse Survey data used for the study also took into account changes in the use of mental health care. By and large, families did not see changes in mental health care usage.
The improvements seen in mental health were “not about families accessing more care; it’s that they are less stressed about their finances.”
The policy also had a “larger effect in low income households, who need the money most.” This is partly because the expanded CTC did not require that families work to get the benefit, unlike the earned income tax credit. Instead, the policy had “fewer strings attached.”
The group used Census data from the Household Pulse Survey, finding that the expanded CTC was associated with “reduced anxiety symptoms among low-income adults with children, as well as greater mental health benefits among Black and Hispanic people than among White people… The reduction in the prevalence of clinically meaningful anxiety symptoms (–3.4 percentage points) represents a 13.3 percent reduction from baseline anxiety levels among adults with children.”
The authors argue this reduction represents a “meaningful change in the distribution at the population level, particularly considering the challenging pandemic-related circumstances during which [the CTC] was implemented and the potential cumulative effects if the benefit were to be extended.”