During the COVID-19 pandemic, stimulus checks were a big help and everyone loved it.

The federal government issued three rounds of checks to millions of Americans.

There were even some cities and towns in the U.S. that experimented with sending direct payments to poor groups to alleviate poverty.

A new preliminary study published this week on SSRN has revealed some shocking findings.

In the report, we learn what those types of checks can and cannot do. 

There has been improvement in outcomes for recipients of UCTs in low-income countries in previous studies .

Among them are raising consumption, improving children's health, and reducing violence between intimate partners.   

According to the new study, small cash transfers in high-income countries didn't hurt, but neither helped, recipients living in poverty.  

Because the lump sum wasn't enough to meet their needs, they felt more distressed about their financial situation.

A nice bonus, but not enough.

The study analyzed data from 5,243 people in poverty in the U.S., with all participants earning about $1,000 a month on average.

That is roughly about half of the people were living below the federal poverty line.  

The researchers divided the participants into three groups and paid each group $0, $500 or $2,000 as a one-time payment. 

According to researchers, the two groups that received the one-time transfer of $500 or $2,000 should experience positive effects in comparison with the control group that received nothing. 

But that didn’t happen. In fact, the groups that received money "experienced more stress on how to spend it." 

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