Study Finds CTC Expansion Fueled Dip in Anxiety, Depression in Recipient Families

As Congress prepares to take up a new bipartisan tax bill as early as this week that would restore some of the expanded Child Tax Credit benefits, a new study finds that the 2021 expansion had a positive impact on the mental health of families who received it. A team led by Rita Hamad, who heads the Social Policies for Health Equity Research (SPHERE) Center at the Harvard T.H. Chan School of Public Health, published the study earlier this month and Hamad spoke to Spotlight about the findings recently. The transcript has been lightly edited for length and clarity. 

Why don’t we start with some background on the SPHERE Center and the work you do generally?

So, I’m the director of the Social Policies for Health Equity Research Center, or SPHERE Center, and our team primarily works to evaluate the effects of social and economic policies on health. Our goal is to produce scientific evidence to inform policy making to address health equity. And in the past, we’ve done studies on federal nutrition programs, a lot of studies on the U.S.’s largest poverty alleviation program, the Earned Income Tax Credit, and education policies like school segregation. So, when Congress expanded the Child Tax Credit in 2021, we were really excited to evaluate how this major policy shift would affect the health of low-income families.

And is this the first study that you’ve done on the CTC?

Yes. Before the 2021 expansion, the Child Tax Credit was primarily targeted towards middle-income families and so it just wasn’t a policy that really represented a robust part of the safety net. But that changed in a major way in 2021 and we jumped on the opportunity to understand this expanded policy.

Tell me just a little bit more in detail about the study, what you were trying to do, and then obviously what you found.

For this particular study, we were examining the health effects of this 2021 expansion of the Child Tax Credit. To give a little bit of background, in response to all the economic hardship brought on by the pandemic, Congress expanded the CTC during COVID. Previously, the CTC provided up to $2000 per child, again mostly targeted toward middle-income families. And in 2021, the CTC was expanded to be up to $3,600 per child. And the eligibility criteria were expanded so that even the lowest-income families and even those making zero income would be eligible.

The other unique feature about that 2021 expansion was that instead of getting the CTC as a lump sum when you do your taxes in the spring, families got it distributed monthly in the months from July to December of 2021.

So, what we did is we used data from the U.S. Census, and we were particularly interested in mental health among families with children, the parents in particular. We compared a couple of different mental health measures—depression, anxiety, use of mental healthcare services—among parents before and after the Child Tax Credit expansion. We also wanted to make sure that any changes that we saw weren’t just due to COVID or something else, so we subtracted out the before and after changes in mental health among adults without children, kind of like a randomized control trial.

We focused especially on the lowest-income adults, those who made less than $35,000 a year, as a lot of these people were newly eligible for the CTC with that 2021 expansion. And we did find that the monthly CTC payments resulted in a meaningful reduction in depressive symptoms and anxiety symptoms among adults with kids. We saw a reduction of three percentage points, for example, in anxiety, which is a 13% improvement from baseline. We didn’t actually find any changes in the use of mental health services, which suggests to us that mental health didn’t improve because all of a sudden people had money that they were going to use on getting medications or going to therapy, but rather that people’s stress levels were improving because they had less financial stress. And this is sort of corroborated by other studies that have looked at how people spent those CTC payments, finding that they spent them on things like food and housing and they reduced their material hardship.

In terms of the implications for kids, we didn’t particularly study kids, but we know that improving the environments that kids live in, and the mental health of their parents is critically important for their development and really a terrific way to invest in the country’s future.

What data from the Census are you able to use to look at mental health?

This is from the Household Pulse Survey that the Census started at the beginning of the pandemic. They don’t have a ton of measures of health but the ones that they do have for mental health in particular were anxiety symptoms—the severity of people’s anxiety symptoms—and then depressive symptoms, and then whether or not people were taking medications for mental health or going to see a mental health provider.

And were there particular racial differences that you saw?

Yes, we saw improvements for all racial groups, but we saw the greatest improvements for Black and Hispanic people and for people of other racial groups who are often immigrants. We know that these groups are also the ones that experienced the greatest economic and health burdens during the pandemic. Because of current and historical structural racism and things like housing policy, these groups also have less wealth and less of a buffer to fall back on than White families during times of economic hardship. So, they stood the most to gain from having this new source of income support.

I don’t know how much you’ve looked at the new CTC proposal, but I’m just wondering if you have any thoughts on how the current proposal is set up and the impact that it might have.

The current bill is sort of combining an expansion of the CTC with other business tax breaks supported by Republicans. Basically, what it’s doing is—through some slightly complicated eligibility rules—it’s increasing the amount of the CTC benefit for people whose incomes are in the range of about $10,000 to $40,000. What’s different from the 2021 expansion is it’s not providing any benefit to the lowest income people and people with zero income, who would still be left behind. It’s being estimated that it’s going to lift 400,000 kids out of poverty, which is amazing, but the 2021 CTC expansion lifted 3 million children out of poverty, so it’s a little bit more than 10 percent. But again, it’s better than nothing and it will definitely be hugely helpful to those families.

I know it’s been a frustrating time for supporters of this policy given that there is now so much data indicating the benefits of the 2021 expansion.

I think the CTC, to me anyway, seems like a policy that both parties can agree on; people on both sides of the aisle say they value families and supporting children. I know that there was a lot of discussion early on, and there continues to be, that the 2021 CTC expansion potentially reduced employment among the families that received it. But there’ve been a couple of studies—not by my team but by others—that found that there was little, if any, effect on employment. And in policy making, there’s this idea of a cost benefit analysis so that even if there were tiny decreases in employment, they need to be weighed against these really substantial improvements in health found by my study and other people who’ve looked at decreasing food insecurity.

And again, keep in mind that when the 2021 CTC expansion passed, it was in the middle of a pandemic. So, you really can’t blame people for taking the opportunity not to have to go into work. especially because a lot of the lowest income people work in low wage jobs that involve a lot of interpersonal contact. So, I actually find it surprising that it didn’t decrease employment in a big way. There’s also the idea that giving people cash actually allows them to pay for childcare so that then they have more ability to go into the workforce.

And finally, are there any other studies that the center is planning on the CTC specifically?

One major gap is that there’s surprisingly not a lot of studies of how that 2021 Child Tax Credit expansion affected child health. So, we are trying to explore that a bit more and the other opportunity that we might be looking into is evaluating the effects of state child tax credit policies. Even if this federal bill falls apart, there’s actually a lot of movement by state governments in terms of child tax credits. There are actually 14 states that currently have their own CTC, and these are actually across the political spectrum. Whenever these sorts of policy changes happen, it’s a good opportunity for us as researchers to see what kinds of effects those changes are having and try to inform other people, other states, or the federal government.