Thursday, May 14, 2020
New research described in the Bulletin on Retirement and Disability published by the National Bureau of Economic Research provides new support for thinking about ways to help maximize use of benefits to pay for core living expenses. Researchers Lint Barrage (UC Santa Barbara), Ian Chin (Michigan), Eric Chin (Dartmouth),and Justine Hastings (Brown) examine how timing of receipt of Supplemental Nutrition Assistance Program (SNAP) benefits affects a household's ability and success in paying for utilities, such as electric bills. They observe:
Our results suggest that, for low income households, timing of income from government benefits and the timing of bills due may have long-run consequences. If bills are not received when income is received, households are more likely to miss payments, which may compound into disconnections which may further impact family financial and health outcomes.
These results add to a growing literature suggesting that government benefits programs and/or private industry innovate in ways to help low income households balance budgets throughout the month and avoid potential poverty traps. In the case of electricity bills, moving bill receipt to coincide with SNAP benefits receipt could improve repayment rates. This could help low income families avoid poverty traps, but also lower electricity rates for all rate payers in regulated markets, since collection and electricity service disruption are costly and must be covered by regulated electricity rates. Further research is needed to implement and measure the impact of changes in timing of bill receipt through, for example, a randomized controlled trial, and to expand the outcome measures of impact to include measures of financial well being such as credit scores.
For more, read How Bill Timing Affects Low-Income and Aged Households, NBER RDRC Working Paper 19-09) and the Bulletin summary.
Our thanks to George Washington Law Professor Naomi Cahn for this reference. I suspect that the timing of core household bills and public receipt of pandemic-driven federal stimulus payments would make for another interesting study.