Poverty Lab Direct Giving Lab

Children born into poverty in the United States are increasingly likely to remain poor as adults. Research has shown that education is the single most effective route out of poverty, and this is especially true as the labor market continues its decades-long shift away from manufacturing and agriculture toward new fields in the “knowledge economy.” Indeed, the difference is stark: with only a high school diploma, nearly half of all children born into poverty will remain poor as adults; with a college degree, that number falls to 17 percent.

Despite this clear remedy, youth who grow up in poverty face significant barriers to educational attainment and success in college. Research suggests that costs associated with a college education, including enrollment fees, school supplies, and living expenses, can be barriers for low-income students to enroll and persist in college.

The Direct Giving Lab (DGL) is a non-profit dedicated to increasing the use of unconditional cash transfers as a form of philanthropy in the United States. DGL approached The University of Chicago Poverty Lab with interest in conducting a small-scale research study on their next phase of cash transfers during the 2018-2019 school year. DGL is particularly interested in understanding whether providing a small, well-timed cash transfer of $1,000 to low-income families has a measurable impact on a student’s likelihood of pursuing a postsecondary education.

The Poverty Lab is partnering with DGL and OneGoal—a Chicago non-profit that provides counseling and other supports to students throughout the college application and enrollment process—to conduct a randomized controlled trial of cash transfers. RCTs are considered the “gold standard” for evaluating social programs. While the ultimate size of the sample is contingent on DGL fundraising, we plan to recruit a minimum of 400 students, with 200 offered the cash transfer and 200 acting as a comparison group. 

Community-based partners are integral to the Poverty Lab’s work, and OneGoal’s input will be crucial to determining the appropriate time for both randomization and the distribution of the cash transfer. Data to be collected include the number of college applications submitted, standardized test scores, level of college match, and college enrollment through administrative data and other data sources. The outcomes of the two groups will be compared to determine the impacts of the cash transfer.