Impact statement

To improve the future life chances of young people from economically deprived backgrounds, we need policies and interventions which target key mechanisms underlying the pathways between poverty and future life chances – in particular, ones which consider youth mental health, which plays a key role in this relationship. Mental health is inextricably linked to both poverty and future life chances, in a vicious cycle. Poverty can lead to poorer mental health, which reduces opportunities and increases the risk of lifetime poverty. Cash transfer programmes are one of the most common strategies to reduce poverty reaching substantial proportions of populations living in low- and middle-income countries. Because of their rapid expansion in response to the COVID-19 pandemic, they have recently gained even more importance. More recently, there have been suggestions that these cash transfers might improve youth mental health, disrupting the cycle of disadvantage at a critical period of life. Here, we present a conceptual framework describing potential mechanisms by which cash transfer programmes could improve the mental health and life chances of young people. Furthermore, we explore how theories from behavioural economics and cognitive psychology could be used to more specifically target these mechanisms and optimise the impact of cash transfers on youth mental health and life chances. Based on this, we identify several lines of enquiry and action for future research and policy.

How might cash transfers influence youth mental health and life chances?

Figure 1 depicts the hypothesised relationships between cash transfer programmes, youth mental health and life chances outcomes. It identifies potential mediators which could optimise the impact of cash transfer programmes for youth mental health and in turn lead to improved life chances. For this paper, we conceptualise life chances as social and economic opportunities available to someone depending on their circumstances or context (Roth, Reference Roth1981; Evans et al., Reference vans, Behrens and Kaluza2000) and which are shaped by structural factors. Based on previous work of Richards et al. (Reference Richards, Abbott, Collis, Hackett, Hotopf, Kuh, Jones, Maughan and Parsonage2009) on youth mental health and life chances, we focus on life chances related to education, skills and labour market attachment and social function. The framework is relevant for young people aged 10 to 24 years. We select this age group and exclude very young children so that we can focus more on targeted mechanisms present in young people and adolescents. This is in line with more recent definitions of adolescence and young people which extend to a slightly older age as this reflects better current understanding of patterns of adolescent development (Patton et al., Reference Patton, Sawyer, Santelli, Ross, Afifi, Allen, Arora, Azzopardi, Baldwin, Bonell, Kakuma, Kennedy, Mahon, McGovern, Mokdad, Patel, Petroni, Reavley, Taiwo, Waldfogel, Wickremarathne, Barroso, Bhutta, Fatusi, Matto, Diers, Fang, Ferguson, Ssewamala and Viner2016). Furthermore, this also represents the age group for which mental disorders represent the primary cause of disability worldwide (Armocida et al., Reference Armocida, Monasta, Sawyer, Bustreo, Segafredo, Castelpietra, Ronfani, Pasovic and Hay2022).

Figure 1. The influence of cash transfer programmes on youth mental health and life chances and potential mechanisms for optimising youth outcomes.

Mental health and consequences for life chances

There is a good deal of evidence that improved youth mental health is associated with more positive life chances outcomes, including for physical health (Thompson et al., Reference Thompson, Richards, Ploubidis, Fonagy and Patalay2021), education (Dalsgaard et al., Reference Dalsgaard, McGrath, Østergaard, Wray, Pedersen, Mortensen and Petersen2020; Hoffmann et al., Reference Hoffmann, McDaid, Salum, Silva-Ribeiro, Ziebold, King, Gadelha, Miguel, JdeJ, Rohde, Pan, Bressan, Mojtabai and Evans-Lacko2021) and employment (Thompson et al., Reference Thompson, Richards, Ploubidis, Fonagy and Patalay2021), in the short-term and through to mid-life. The potential for cash transfers to influence mental health and life chances could thus facilitate a virtuous cycle. Youth emotional and behavioural problems independently predict outcomes in adult life, such as social class and social adjustment (Caspi et al., Reference Caspi, Houts, Ambler, Danese, Elliott, Hariri, Harrington, Hogan, Poulton, Ramrakha, Rasmussen, Reuben, Richmond-Rakerd, Sugden, Wertz, Williams and Moffitt2020; Laceulle et al., Reference Laceulle, Chung, Vollebergh and Ormel2020; Thompson et al., Reference Thompson, Richards, Ploubidis, Fonagy and Patalay2021). In particular, youth externalising problems such as conduct problems are more strongly associated with poor life chances over the lifetime in comparison with internalising problems (Richards et al., Reference Richards, Abbott, Collis, Hackett, Hotopf, Kuh, Jones, Maughan and Parsonage2009; Knapp and Evans-Lacko, Reference Knapp, Evans-Lacko, Thapar, Pine, Leckman, Scott, Snowling and Taylor2015; Hammerton et al., Reference Hammerton, Murray, Maughan, Barros, Gonçalves, Menezes, Wehrmeister, Hickman and Heron2019). Finally, analysis across the 1946, 1958 and 1970 British birth cohorts (Colman et al., Reference Colman, Murray, Abbott, Maughan, Kuh, Croudace and Jones2009; Richards et al., Reference Richards, Abbott, Collis, Hackett, Hotopf, Kuh, Jones, Maughan and Parsonage2009; Caspi et al., Reference Caspi, Houts, Ambler, Danese, Elliott, Hariri, Harrington, Hogan, Poulton, Ramrakha, Rasmussen, Reuben, Richmond-Rakerd, Sugden, Wertz, Williams and Moffitt2020; Gronholm et al., Reference Gronholm, Knapp, Brimblecombe, Maughan, Richards, Bonin, Hoffmann, Kadel, King, Hoomans, O’Shea and Evans-Lacko2022) found that childhood conduct problems were associated with lower educational qualifications, persistent economic inactivity, lower earnings and increased criminal convictions and arrests.

Could more attention to mechanisms in the design and implementation of cash transfer programmes improve youth mental health outcomes?

Although evidence suggests there is potential for cash transfer programmes to improve youth mental health (Zimmerman et al., Reference Zimmerman, Garman, Avendano-Pabon, Araya, Evans-Lacko, McDaid, Park, Hessel, Diaz, Matijasevich, Ziebold, Bauer, Paula and Lund2021), cash transfers are not a panacea and on their own tend to be a relatively ‘blunt’ instrument, which, while providing additional financial resources to the household, were never designed to improve youth mental health. Because cash transfer programmes do not necessarily address the mechanisms by which poverty undermines mental health, we may not fully realise the potential of these programmes to impact youth mental health. More attention to the cognitive, affective, behavioural and contextual barriers at the youth, family and community levels in the design and implementation of cash transfers could potentiate their benefits for youth mental health and life chances.

Theories from behavioural economics and cognitive psychology can offer some useful insights about behaviour change which could inform the operation of cash transfer programme policies to improve youth mental health and life chances (Gennetian et al., Reference Gennetian, Shafi, Aber and de Hoop2021). Behavioural economics would suggest that we use positive reinforcement to incentivise desired behaviours rather than punishments or mandates (or rigid conditionalities) which penalise individuals who do not comply with specified conditions or policies and may undermine youth mental health (Thaler and Sunstein, Reference Thaler and Sunstein2008). Nudge theory, fresh start effects and thinking slow, for example, have been explored in other studies and may offer potentially useful ideas about how cash transfer programmes could facilitate youth mental health and life chances. We summarise the considerations for potential design and implementation strategies here.

Nudge theory posits that the choice architecture shaping one’s environment and the framing of decisions can positively influence decision-making, allowing individuals to make better decisions in line with their goals (Thaler and Sunstein, Reference Thaler and Sunstein2008). A key facet of this theory is that individuals need to maintain some feeling of control or autonomy in their decision and that the desired behaviour is positively incentivised rather than mandated or enforced. Some of the cognitive and affective consequences of poverty may make it difficult for people to be intentional with their spending and align it with future goals and aspirations and hence limit life chances. Poverty, for instance, is hypothesised to reduce executive functioning, thus increasing future discounting, impairing decision-making, and inducing negative affective states such as anxiety and depression (Haushofer and Fehr, Reference Haushofer and Fehr2014). Given the cognitive burden that individuals living in poverty already face, complex administrative procedures and rigid conditionalities which penalise individuals for not meeting required conditions may also lead to increased household stress and reduce feelings of self-efficacy, subsequently negatively impacting on caregiver and youth mental health and life chances (Baird et al., Reference Baird, de Hoop and Özler2013). During the COVID-19 pandemic, many programmes have become more flexible with administrative procedures and also relaxed conditionalities providing a template for testing alternatives (Bauer et al., Reference Bauer, Garman, McDaid, Avendano, Hessel, Díaz, Araya, Lund, Malvasi, Matijasevich, Park, Paula, Ziebold, Zimmerman and Evans-Lacko2021).

Spending decisions could also be aided by framing messages about what the cash is for and what could be done with it. For example, a labelled cash transfer programme in Morocco which was framed as an education support programme, improved parents’ beliefs about the value of education and greatly increased school participation (Benhassine et al., Reference Benhassine, Devoto, Duflo, Dupas and Pouliquen2015). Messaging around how the cash could be used to target mediating factors important for youth mental health such as social participation or access to culture could lead to greater impacts on youth mental health.

Fresh start effects and temporal landmarks can also be used to motivate aspirational behaviour (Dai et al., Reference Dai, Milkman and Riis2014). In line with this theory, days or events can be identified or framed as a fresh start moment – a period when individuals tend to be more open and interested in striving to achieve goals or ambitions. Research suggests that identifying set days such as birthdays or a new year could act as a fresh start; cash transfer programmes could recognise the timing of the cash transfer delivery as a window by which individuals may be more open to long-term planning and thus potentially more successful at overcoming the various barriers that they face. One cash transfer programme from Madagascar, for example, supports mothers who are the recipients of the cash transfer to consider longer-term planning around expenses and provides positive incentives around investment just before they receive the monthly payments (Vermehren et al., Reference Vermehren, Ravelosoa and Rawlings2019). This type of timed nudging may break the cycle whereby individuals tend to consider immediate expenses and could also engender a feeling of self-efficacy and self-control.

Finding ways to incorporate thinking slow and deliberately rather than thinking fast and automatically (Kahneman, Reference Kahneman2011; Heller et al., Reference Heller, Shah, Guryan, Ludwig, Mullainathan and Pollack2017), could reduce impulsivity and allow individuals to be more considered in their reactions to various situations and events, particularly challenging ones which could lead to conflict and harm youth mental health and life chances. We know that youth living in poverty face several environmental and contextual challenges including high levels of violence, family instability, high levels of unemployment and poor quality schools. These factors are associated with increased mental health problems and likely reduce the potential for cash transfer programmes to improve mental health and life chances. In particular, ‘cash plus’ programmes might offer cognitive behavioural therapy (CBT) or other types of psychological support which could help youth and parents of youth to learn strategies for thinking more slowly and deliberately. For example, combining cash transfers with CBT reduced disruptive behaviour problems among young men involved in criminal activities in Liberia (Blattman et al., Reference Blattman, Jamison and Sheridan2017) more effectively than either intervention on its own.

While integrating theories from economics and cognitive psychology represents a promising approach, more research is needed to better understand cash transfer design and implementation factors in relation to youth mental health and how the contextual characteristics of population and setting may mediate and/or moderate outcomes (Skivington et al., Reference Skivington, Matthews, Simpson, Craig, Baird, Blazeby, Boyd, Craig, French, McIntosh, Petticrew, Rycroft-Malone, White and Moore2021). For example, a recent trial in Kenya did not find an interaction between psychotherapy (in this case, problem management plus [PM+]) and cash transfer receipt. Moreover, at 12 months follow-up, when looking at each intervention on its own, only those receiving the cash transfer had positive impacts on mental health. Given the large amount of evidence demonstrating positive impacts of psychosocial interventions in low resource settings (Barbui et al., Reference Barbui, Purgato, Abdulmalik, Acarturk, Eaton, Gastaldon, Gureje, Hanlon, Jordans, Lund, Nosè, Ostuzzi, Papola, Tedeschi, Tol, Turrini, Patel and Thornicroft2020), this suggests that we need a better understanding of how these complex combined interventions work together and how they interact with those who are receiving the intervention, the context in which it is delivered and what interventions might be needed to potentiate positive impacts.

Future directions for research and policy

The impacts of cash transfer programmes can go beyond those of their specific objectives. Providing cash transfers to a household as a means of reducing poverty could also improve youth mental health through a range of individual youth, family/caregiver and community mediators. Nonetheless, cash transfer programmes alone are likely to be insufficient to improve youth mental health and life chances (Dai et al., Reference Dai, Milkman and Riis2014; Zimmerman et al., Reference Zimmerman, Garman, Avendano-Pabon, Araya, Evans-Lacko, McDaid, Park, Hessel, Diaz, Matijasevich, Ziebold, Bauer, Paula and Lund2021). To more effectively improve youth mental health and life chances outcomes, more specific targeting of youth mental health and associated mechanisms need to be incorporated into programme design and implementation. This requires better understanding of the potential mechanisms along the pathway to improved youth mental health and life chances and consideration of behavioural economics and cognitive theories.

To address these questions, future research could consider three avenues of enquiry: (I) Greater attention could be given to conducting mediation and moderation analysis to examine the mechanisms by which cash transfer programmes improve youth mental health, in particular considering how these interventions may interact with individual youth, household and community contextual characteristics. Thus, evaluations should also acknowledge the complexity in the relationship between poverty and mental health, which may vary substantially depending on the mental health condition and the specific contextual characteristics of poverty (Dandona et al., Reference Dandona, Kumar, Dhaliwal, Naghavi, Vos, Shukla, Vijayakumar, Gururaj, Thakur, Ambekar, Sagar, Arora, Bhardwaj, Chakma, Dutta, Furtado, Glenn, Hawley, Johnson, Khanna, Kutz, Mountjoy-Venning, Muraleedharan, Rangaswamy, Varghese, Varghese, Reddy, CJL, Swaminathan and Dandona2018; Mor et al., Reference Mor, Ahluwalia and Atmavilas2018; Juárez et al., Reference Juárez, Honkaniemi, Dunlavy, Aldridge, Barreto, Katikireddi and Rostila2019). Some contextual factors such as urbanicity may act as both risk and protective factors for mental health conditions (Solmi et al., Reference Solmi, Dykxhoorn, Kirkbride, Okkels, Kristiansen and Munk-Jørgensen2017) and the nuances of these potential moderators could help us better understand the role of cash transfers to improve youth mental health. This requires using large longitudinal cohorts which assess youth and parent factors, linked with other contextual community data. (II) Consideration could be given to a wider range of mental health outcomes which may be impacted by cash transfers. Existing evaluations which have considered mental health tend to focus on depressive symptoms or psychological distress with less investigation of impacts on externalising problems such as conduct disorder. Moreover, in addition to pathological aspects of mental health problems, mental health should be considered as a continuum, including measurement of functioning, self-efficacy and well-being (Westerhof and Keyes, Reference Westerhof and Keyes2010; Patel et al., Reference Patel, Burns, Dhingra, Tarver, Kohrt and Lund2018) which can be important for capabilities (Sen, Reference Sen2009). (III) Strategic multidisciplinary collaborations are needed to facilitate understanding of the complex pathways by which cash transfers interact to influence youth mental health and life chances. Bringing together researchers from economics, social science, anthropology, psychology and neuroscience can facilitate data collection, analysis and interpretation of the social, economic and neurobiological determinants of mental health and associated life chances.

In relation to policy: (I) Further work should be done to design cash transfer programmes that target mechanisms which specifically support youth mental health and well-being or an evaluation which also considers broader social and mental health impacts on youth (MacAuslan and Riemenschneider, Reference MacAuslan and Riemenschneider2011; Fisher et al., Reference Fisher, Attah, Barca, O’Brien, Brook, Holland, Kardan, Pavanello and Pozarny2017). (II) To be most effective, cash transfer programmes should consider the underlying sociocultural, economic and political context and framing conditionalities which are sensitive to that context; for example, by relaxing restrictions and conditionalities during the COVID-19 pandemic (Bauer et al., Reference Bauer, Garman, McDaid, Avendano, Hessel, Díaz, Araya, Lund, Malvasi, Matijasevich, Park, Paula, Ziebold, Zimmerman and Evans-Lacko2021). (III) ‘Cash transfer plus’ programmes should be considered by policy makers, incorporating evidence-based youth mental health treatment or prevention interventions into cash transfer programmes. These types of programme developments may require piloting to reduce any unintended effects (e.g., so as not to highlight the connection between poverty and mental health problems in a way that could increase prejudice or internalised stigma of beneficiaries in a cash ‘plus’ programme). Moreover, additional costs and benefits should be weighed carefully given the reality of constrained resources. For example, we acknowledge that there is a risk to investing in cash transfer ‘plus’ programmes without essential complementary services such as free basic healthcare, education and social services, especially in LMICs where these are typically under-resourced and this should be further considered when piloting and evaluating new strategies.

Cash transfer programmes are likely to continue to be used in many countries for the foreseeable future, regardless of how effective they are for mental health. Thus, it is important to try to understand how to potentiate their benefits for youth mental health alongside other actions to improve mental health. In this vein, it is important to consider how we might incorporate youth mental health promotion, prevention (World Health Organization, 2020) and treatment interventions to complement cash transfer programmes and more specifically target youth mental health and associated mechanisms (Dai et al., Reference Dai, Milkman and Riis2014).