Impacts of Basic Income on Health and Economic Well-Being: Evidence from the VA’s Disability Compensation Program
We study impacts of a cash transfer program with no means-test and no work restrictions: the US Department of Veteran Affairs (VA) Disability Compensation program. Our empirical strategy leverages quasi-random assignment of veterans claiming mental disorder disability to examiners who vary in their assessing tendencies. We find that an additional $1,000 per year in transfers decreases food insecurity and homelessness by 4.1% and 1.3% over five years, while the number of collections on VA debts declines by 6.4%. Despite facing virtually no direct monetary costs, healthcare utilization increases by 2.5% over the first five years, with greater engagement in preventive care and improved medication adherence. This demand response is in part explained by the ability to overcome indirect costs of accessing care ("ordeals"). Additionally, VA-conducted surveys suggest that transfers improve communication and trust between veterans and VA clinicians, leading to greater overall satisfaction. Apart from a reduction in self-reported pain, we estimate precise null effects on mental and physical health, including depression, alcohol and substance use disorders, body mass index, blood pressure, and glucose levels. Effects on mortality are small: we can rule out reductions greater than 0.011 percentage points (0.14%) over five years.
We thank Lisa Brenner, David Card, David Chan, Janet Currie, Mark Duggan, Liran Einav, Amy Finkelstein, Audrey Guo, Sarah Miller, Ashley O'Donoghue, Stacey Pollack, Liam Rose, Heather Royer, Frank Schilbach, Hannes Schwandt, George Sheldon, Paul Silver, Jodie Trafton, Todd Wagner, VA-GAO Health Outcomes Study group, and seminar participants at ASHEcon, Brock University, Carleton University, Indiana University SPEA, National Tax Association Conference, NBER Summer Institute (Aging), Simon Fraser University, Singapore Management University, and Southern Economics Association Conference for helpful comments. We are especially thankful to Paul Shute, Wanmei Ou, Babatunde Oguntade, John McCarthy, Rani Hoff, Wes Kasprow, and the VA Office of Performance Analysis and Integrity and VA Debt Management Center for providing data access. The views expressed herein are those of the authors and do not necessarily reflect those of the United States Department of Veterans Affairs, the Veterans Health Administration, or the Veterans Benefits Administration. The work in this paper is part of internal VHA quality improvement and deemed non-research by the Stanford IRB. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Jonathan Zhang is a federal contractor with the US Department of Veterans Affairs.