What happens when you give teens no-strings cash?
From an article by The Hechinger Report
$50 (£40) a week for 40 weeks: A 40 week cash transfer program for high schoolers (secondary schoolers) from primarily economically disadvantaged families resulted in better attendance, higher nutrition, more confidence, more financial literacy, accumulated savings but no improvement in grades.
For the past five years, hundreds of high schoolers in New Orleans have shopped - or saved - as part of a project to explore what happens if you give cash directly to young people, no strings attached.
"The $50 study,” as it’s known, began at Rooted School as an experiment to increase attendance. The study has since grown to eight other high schools in the city, as well as Rooted’s sister campus in Indianapolis, with students randomly selected to receive $50 every week for 40 weeks, or $2,000 (£1600) total. By comparing their spending and savings habits to a larger control group, researchers wanted to figure out whether the money improved a teen’s financial capability and perception of themselves. They also wanted to know: Could the cash boost their grade-point averages and reading scores?
A final report of the $50 study suggests a little bit of spending cash can make a difference in young people’s lives.
The report shows students who received the cash payments were slightly more likely to attend school than those who didn’t. Academic performance did not differ between the groups. But financially, the extra cash helped students acquire stronger long-term planning skills and familiarity with savings accounts and other financial products. They ended the study, on average, with $300 (£225) saved away - a 15 percent savings rate, triple the national average for American adults.
“When young people are given the opportunity to manage money in low-stakes environments, they build the habits that shape long-term financial health,” said Stacia West, an associate professor at the University of Tennessee, Knoxville. “The short-term habits we’re seeing are laying the foundation for lifelong financial capability.”
In the U.S. and Canada, researchers have found links between cash transfer pilots that focus on low-income families and better test scores and graduation rates for their kids. So far, though, few experiments have targeted young people or examined how the programs influence their lives specifically. “There’s a deep, deep distrust that we adults have of young people,” said Jonathan Johnson, CEO of the Rooted School Foundation. “That distrust is to their detriment.”
In New Orleans, roughly four in five of Rooted students come from economically disadvantaged families, and during the pandemic, many struggled to prioritize school. Some students skipped class to provide child care for their working parents, or because they needed to work themselves. With some seed funding from a local education non-profit, Rooted started a “micro-pilot” to test whether cash could help students make ends meet and get themselves to school.
The original cohort included 20 students, half of whom received the $50 payment. In that micro-pilot, those receiving the cash saw their material wellbeing improve, meaning their family could more easily afford rent or utilities, and they gained skills around setting financial goals. Rooted added students from its Indianapolis campus and another high school in New Orleans. And for their final report, researchers sifted through the spending and survey data from 170 students who received the cash payments and 210 students who did not.
The two-year report found students in the treatment group attended 1.23 more days of school, and spent close to half their funds on essentials like food and groceries. The report also noted that 70 percent of all students at the participating schools qualify for subsidized meals, suggesting “this spending may reflect efforts to meet immediate nutritional needs.” One 12th grader in a survey mentioned using the money to feed their siblings.
Read Irvin, chief of staff for Collegiate Academies in New Orleans said the $2,000 had provided the extra incentive a few students needed to stick it out until graduation. “That’s incredibly impactful for their life trajectories,” she said.
In January 2024, the city of New Orleans invested $1 million to bankroll another extension of the study, as part of an economic mobility initiative. The city funding not only expanded the $50 study to nine high schools, it also set a longer timeline for the research: About 800 students who participate will have their data tracked for 18 months after their graduation.
Researchers also found students who received the $50 reported greater agency. They felt more control over their finances and more confidence about making long-term financial decisions. Students, according to the report, aligned their spending to future goals such as college prep classes and getting a driver’s license.
Talia Livneh, senior director of programs for the Rooted School Foundation, said, “I don’t think what we’re doing is so radical. I believe this just works. Kids don’t lack character. They lack cash. They deserve deep, deep trust that students and people know what’s best for them.”
Read the full article here.
[Note Rooted School's Vision:
Our Moonshot
228 years: That’s how long it would take for African Americans to accumulate the same amount of wealth whites have now if current policies remain in place. 84 years for Latino Americans. We believe schools can play a bigger role in changing this than they currently are. Rooted School aims to lay the groundwork for closing this gap in our students’ lifetimes. One way we’re measuring this is by becoming the U.S.’s leading placer of teens into the tens of thousands of jobs opening in their communities over the next decade and beyond that provide a family-sustaining wage. This will not be easy. Many will say that we can’t do it. We hope that you’ll join us anyway.]
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From an article by The Hechinger Report, 17/12/2025