Social welfare boosts citizens' mental health, decades' worth of data shows

Last modified February 5, 2021. Published February 5, 2021.
Better benefits equal better mental health. (AP Photo/Jason R. Henske)

Better benefits equal better mental health. (AP Photo/Jason R. Henske)

When governments in developed countries like the U.S. and Britain provide extra support for low-income people through tax credits and more generous unemployment benefits, individuals’ mental health and wellbeing generally improve, according to a new paper by a group of U.K. researchers. 

By contrast, however, introducing benefit restrictions like work requirements and time limits generally worsen mental health. 

The conclusion, which is based on a comprehensive review of published quantitative observational studies over decades, has increased importance as the coronavirus pandemic and accompanying economic turmoil has led governments around the world to overhaul social assistance programs.

“Changes to social assistance policies, reductions in those, were a very common policy that was studied, and were mostly related to detrimental outcomes in terms of mental health,” said lead author Julija Simpson, a Ph.D. student at Newcastle University. 

Simpson wrote the paper, which will be published in the March 2021 issue of Social Science & Medicine, alongside Newcastle University colleagues Viviana Albani, Zoe Bell, Clare Bambra and Heather Brown. 

The paper comes as U.S. lawmakers consider overhauling the child tax credit system, and the U.K. is mulling additional austerity measures that would cut unemployment benefits, possibly sending hundreds of thousands of British children into poverty. 

Simpson said the mental health implications of these policies must be considered alongside other health and economic concerns. 

“We’re all vulnerable to what happens, and it could be the global pandemic or it could be your own life circumstance, but we all need social security,” said Simpson. “If you’re always concerned with survival, then you can’t really do much else.”

The paper was the first review to systemically examine the effects of social security reforms on mental health, meaning the researchers synthesized a variety of past quantitative studies on the topic rather than conducting their own. 

To do this, they searched several academic databases for studies on the topic between January 1979 to June 2020, coming up with more than 20,000 results. They then used screening criteria to narrow the sample down to just 38 studies. 

“Because I tried to be quite careful not to exclude any relevant studies, the search terms were relatively broad,” said Simpson. 

Out of the studies, 21 examined social welfare expansions and 17 evaluated contractions.

Eight of the studies examined the Earned-Income Tax Credit — or EITC — in the U.S., a policy that subsidizes earnings for low-income families. Four of the studies found that expanding the EITC significantly improved mental health outcomes. An additional study found that introducing a high-rate state EITC reduced the annual age-adjusted suicide rates by nearly 4%. Another study on suicides, however, contradicted this claim.

Two studies also examined an EITC-like “welfare-to-work” program from the U.K. that expanded support for low-income families by providing more generous tax credits. Both studies showed a positive effect on mental health for low-income people. 

“They were generally found to improve mental health for the recipients,” said Simpson of both the U.S. and U.K. policies, adding that tax credits are “a good way to improve both employment outcomes and health outcomes.” 

The researchers also examined seven studies on 1990s welfare reform in the U.S., in which the federal government replaced the Aid to Families with Dependent Children program with a far more limited program called Temporary Assistance for Needy Families, which contained restrictions like work requirements and benefit time limits. Single mothers were most severely impacted by the changes, Simpson said. 

The seven studies were mixed, with some showing a significant deterioration in mental health and others showing no effect. 

“Those studies mostly showed that [the reforms] had negative effects on mental health,” Simpson said. 

The researchers also examined studies on disability and retirement benefits and mental health, though with much smaller sample sizes. 

In aggregate, the studies have a clear message, the researchers found: Expanding social welfare benefits improves mental health. 

The review comes amid a rapidly growing academic interest in examining secondary and potentially unintended effects of social safety net policies. For example, University of Strathclyde economist Otto Lenhart has recently found that raising the minimum wage is associated with a drop in teen births and that providing paid family leave reduces child hunger. 

Simpson said she plans to focus further research on ongoing social security reforms in Britain. She’s also interested in conversations around universal basic income in the U.S. 

The paper, titled “Effects of social security policy reforms on mental health and inequalities: A systematic review of observational studies in high-income countries,” is forthcoming in the March 2021 issue of Social Science & Medicine and was made available online Jan. 18. The authors are Julija Simpson, Viviana Albani, Zoe Bell, Clare Bambra and Heather Brown of Newcastle University. Simpson is lead author. 

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