By Sara Evans-Lacko (Care Policy and Evaluation Centre, London School of Economics and Political Science) and Mauricio Avendano (Unisanté, University of Lausanne)
Mental health is profoundly affected by the social and economic conditions in which people live. In low- and middle-income countries (LMICs), young people’s mental health problems are often exacerbated by poverty. In turn, mental health problems also increase the risk of future poverty by impacting the ability to learn, study and work. This creates a vicious cycle of disadvantage where economic hardship and mental health problems reinforce each other in a bidirectional way and further limit life choices and opportunities.
Cash transfer programmes have become a widely adopted strategy for alleviating poverty in LMICs, aiming to disrupt the cycle of disadvantage. Some studies suggest that cash transfers may improve the mental health of children; but whether this translates into better health and life chances in the long-term is yet to established: Is it possible that the provision of financial support during childhood, particularly over prolonged periods could lead to long-term mental health and social benefits? A potential, yet untested hypothesis is that sustained financial support during childhood improves economic stability and leads to improved mental health in the long-term.
Our recent study delves into these questions, investigating whether children who grew up for a larger part of their childhood (ages 0 to 17 years) during the expansion of cash transfer programmes in Colombia, Mexico, and South Africa had better mental health outcomes in young adulthood (ages 18 to 30 years) than children that grew up without such programmes. Exploiting cross-national variations in this expansion across three countries, we found that longer exposure to a national cash transfer programme during childhood leads to a modest but significant reduction in depressive symptoms in early adulthood.
Potential Pathways to Mental Health Improvements
Our findings suggest that sustained exposure to cash transfer programmes during childhood can help alleviate depressive symptoms in young adulthood. Specifically, we found a 4% reduction in depressive symptoms for each additional year of exposure to these programmes. This highlights the significant potential of long-term economic interventions to improve mental health outcomes, particularly for children from disadvantaged backgrounds. This aligns with the broader body of research on the social determinants of mental health; yet, our findings showed no significant impact on educational attainment and a slight reduction in the likelihood of employment, two of the key hypothesised mechanisms by which cash transfers may influence mental health.
We speculate that cash transfer programmes may relieve immediate financial pressures, allowing young people to delay entering the workforce early. A potential hypothesis is that cash transfer programmes offer families increased stability and safety, which in turn may translate into mental health improvements. A reduction in financial stress may reduce stress and anxiety, which in turn may foster more supportive household environments during the formative years, leading to long-term gains in mental health.
Why Context Matters: The Role of Structural Factors
Despite the benefits we observe for mental health, we found no clear evidence of effects on educational attainment. This suggests that educational disparities and persistent regional inequalities can limit the long-term benefits of cash transfer programmes. For cash transfers to truly improve mental health outcomes and educational outcomes, they must be integrated into a wider strategy that addresses equity in access and quality of education, health and other social care services. This underscores the fact that cash transfer initiatives cannot be considered in isolation from educational, health and social service infrastructure.
In addition, cash transfer programmes operate within a context shaped by historical inequalities, varied access to healthcare, and persistent regional disparities. In areas where these structural barriers remain unaddressed, the capacity of cash transfer programmes to support mental health may be constrained. We speculate that the impact of cash transfer programmes would be greater if they were part of broader policies that also improve infrastructure and quality of education, health and social services, as well as employment opportunities for young adults, alongside initiatives that more directly support youth mental health.
Policymakers should consider this complexity. Cash transfer programmes are likely most effective when positioned within a larger framework that addresses key social determinants such as education and employment opportunities. This approach may help to ensure that cash transfer programmes lead to sustained improvements in life chances and overall well-being.
Policy Implications and a Call for Integrated Approaches
Cash transfer programmes are an important policy tool which could help reduce both poverty and mental health problems. In particular, when given early on and over an extended period of time they can have long-term mental health benefits on young people. These improvements, however, are of relatively small magnitude, suggesting that cash transfers alone may not be sufficient to improve the mental health of young people living in poverty. To ensure that the foundation provided by cash transfer programmes leads to better mental health, governments may consider combining cash transfers with mental health support. Moreover, we speculate that cash transfers may be more effective if introduced in tandem with policies that enhance healthcare, education, and employment opportunities for young people.
The potential for cash transfer programmes to foster long-term mental health improvement may depend on existing educational mental and social services, as well as employment opportunities for young people. Real change will come when we embed cash transfer programmes within a comprehensive policy framework that tackles both poverty and the structural barriers young people face. By situating mental health within this broader landscape, we move closer to creating environments where young people can thrive.
