Shocking news — reducing immediate stress allows people to improve their distant futures.
Adrianna MacIntyre at Vox passes along an interesting study concerning Medicaid expansion and educational attainment:
A 10 percentage point increase in childhood Medicaid eligibility reduced the rate of high school dropouts by 5 percent and increased completion of a bachelor’s degree by 3.3 to 3.7 percent.
Previous research has demonstrated a positive short-term relationship between access to health care and education — when schools offer health care services to students, attendance rates rise and teen pregnancies fall — but this paper is the first to look at educational impacts over a longer time frame.
We’ve seen a lot of evidence on the economics and choice structures during scarcity that people are cognitively overloaded because there is no such thing as a good decision just a series of really nasty and ugly trade-offs that must be made to solve a current problem.
This mindset brings two benefits. It concentrates the mind on pressing needs. It also gives people a keener sense of the value of a dollar, minute, calorie or smile. The lonely, it turns out, are better at deciphering expressions of emotion. Likewise, the poor have a better grasp of costs.
This scarcity mindset can also be debilitating. It shortens a person’s horizons and narrows his perspective, creating a dangerous tunnel vision. Anxiety also saps brainpower and willpower, reducing mental “bandwidth”, as the authors call it. Indian sugarcane farmers score worse on intelligence tests before the harvest (when they are short of cash) than after. Feeling poor lowers a person’s IQ by as much as a night without sleep. Anxieties about friendlessness have a similar effect. In one experiment a random group of people were told that their results on a personality test suggested a life of loneliness. This random subset subsequently performed worse on intelligence tests and found it harder to resist the chocolate-chip cookies provided for them.
We know that the people who were eligible for Medicaid expansions pre-PPACA tended to be from families that were either poor or sick. Medicaid functions as an imperfect substitute for increased cash income as people both feel better/are healthier which is quite valuable in and of itself, and Medicaid replaces previous cash outlays for medical services. Increased income or more accurately, an increased consumption budget that is tied to current resources without indebting the future usually means a better ability to plan for the future. This is not rocket science — remove immediate stress and problems allows people to devote resources to their futures.