Opinion: Money Can’t Buy Happiness, but It Can Buy Health

May 10, 2023

In a piece published by the Hartford Courant and co-signed by our President & CEO Mendi Blue Paca, Emily Byrne (Executive Director, Connecticut Voices for Children) and Daniel Stern (MPH candidate, Yale School of Public Health) advocate for expanding Connecticut’s earned income tax credit to reduce child poverty and increase the health, happiness and quality of life for Connecticut’s most vulnerable communities.

The saying goes that money doesn’t buy happiness. The truth is that, in this country, it does buy health. To that end, proposals in the Connecticut General Assembly would put cash in the pockets of the families who need it most by expanding the state’s earned income tax credit and implementing a fully refundable state child tax credit. But while Gov. Ned Lamont’s budget proposal and the legislature’s final revenue package endorsed an EITC expansion, a permanent CTC was not included.

The governor has done an incredible job advocating for Connecticut’s most vulnerable communities by seeking to increase the state-level EITC, which will provide significant tax relief for low-income families in the state; his leadership should be celebrated for centering the needs of these families in the public discourse as the legislature debates which policies it will pass this session. But Gov. Lamont is right when he says that more needs to be done for struggling low- and middle-income households.

At the start of the legislative session, the governor called for an essential middle-income tax cut, providing an additional $50 monthly for middle-income households. However, given the rising costs of inflation and the high cost of raising children in Connecticut, the state should also enact a permanent state CTC that provides an additional $20-$60 a month to low- and middle-income households with children, thereby providing equitable support for families who have significantly more expenses.

It is estimated that the recent temporary expansion of the federal CTC brought 2.1 million children out of poverty, but the impact of the policy has waned after its expiration, and food insecurity in Connecticut is rising. Poverty is a fundamental detriment to health, and childhood poverty is particularly pernicious. There is a strong association between childhood poverty and poor physical and mental health, worse educational attainment, and increased risky behavior later in life.

Cash transfer programs have been shown to mitigate these effects and improve recipients’ and their children’s health, educational attainment, and long-term earnings. Specifically, the programs reduce the incidence of low birthweight births and infant mortality, and they improve perinatal health. They also lead to improved self-reported overall child health, as well as improved quality of home environments for child development and reduced risk factors for child abuse and mistreatment.

Research has shown that recipients of tax credits increase food expenditures, experience improved food security, and consume more preventive medical care. Cash transfer programs also are associated with improved overall self-reported health and mental health outcomes in adults.

Finally, there is evidence that cash transfer programs improve child beneficiaries’ health in the long-term, both as young adults and into old age.

There are a few ways to understand this evidence. First, improvements in health can be viewed as policy objectives themselves. Second, improvements in health, such as reduced incidence of low birthweight births, are a means to achieve other policy objectives, such as improved educational attainment or greater workforce participation. Finally, and most importantly, the overwhelming evidence demonstrating cash transfer programs improve population health is simply reflective of the universal good the programs provide to recipients, regardless of the mechanisms.

Because cash transfer programs are not targeted to address specific needs of recipients, it can be difficult to understand why they are beneficial, and some may suggest targeted relief is more effective at improving beneficiaries’ wellbeing. Anecdotally, some beneficiaries may use funds from tax credits to buy diapers, others to obtain childcare, and still others to buy fresh groceries.

Some may simply put the extra cash into savings, alleviating some of the stress of keeping to a tight budget. Regardless, all these outcomes are beneficial.

Health, happiness and quality of life are all interdependent measures of mental and physical well-being. The improved health of cash transfer program beneficiaries is thus both a policy objective itself and the observable extension of the programs’ intended but difficult-to-measure effect: making people on average happier, more productive and better off.

It is estimated that the implementation of a CTC in Connecticut in addition to the state’s EITC would reduce child poverty by up to 50 percent. Moreover, a state CTC is overwhelmingly popular with 78 percent of a recent poll’s respondents supporting it. The state therefore should provide a broader-based tax cut for low- and middle-income families with children, and Connecticut can afford to pay for a state CTC by making the right investments, such as reducing its film tax credits.

According to the latest Connecticut Department of Economic and Community Development(DECD) annual report, in FY 2022, the state spent $144.9 million on film tax credits. This is more than the state spent on the child tax rebate last year, estimated initially at $125 million.

Policymakers should prioritize the well-being of Connecticut children and families over investments in Hollywood.

Expanding the Connecticut EITC is an excellent first step to reducing poverty in Connecticut. But implementing a refundable Connecticut child tax credit is a necessary complement. The health of our state depends on it.

Emily Byrne is executive director of Connecticut Voices for Children; Daniel Stern is an MPH candidate at the Yale School of Public Health; Aligned Signers: Shelley Geballe, professor of Clinical Public Health Yale School of Public Health (personal opinion only); Marcella Nunez-Smith, founding director of the Equity Research & Innovation Center at Yale School ofMedicine (personal opinion only); Molly Markowitz, FAAP Chair, Advocacy Committee CT American Academy of Pediatrics Chapter; Laine Taylor, medical director The Village for Families & Children; Janée Woods Weber, executive director CT Women’s Education and Legal Fund; Caprice Taylor Mendez, president Universal Health Care Foundation; JayWilliams, president and CEO Hartford Foundation for Public Giving; Maryam Elahi, president and CEO Community Foundation of Eastern Connecticut; Mendi Blue Paca, president and CEO Fairfield County’s Community Foundation; William W. Ginsberg, president and CEO Community Foundation for Greater New Haven.

Originally published in the Hartford Courant on May 8, 2023.