Work

Local Cash Transfers and Household Debt: Evidence From Johnson County's Direct Assistance Program

Year: 2026

Type: article

Abstract: ABSTRACT Using administrative credit report data, we examine how recipients of an unconditional, unrestricted cash transfer program in Johnson County, Iowa used their one‐time $1400 payment for debt‐related purposes. Unlike previous studies of federal stimulus payments where recipients primarily used the funds to reduce existing debt, we find that DAP recipients took on additional housing and auto debt. Specifically, the assistance significantly increased total debt by $2060 (10% above mean), with the largest increases being in mortgage debt ($1129) and auto debt ($435). These effects appeared immediately after recipients cashed their checks and lasted for 9 months. This study provides insights into how unrestricted local cash transfers affect recipients' debt management decisions.

Source: Journal of Consumer Affairs

DOI: 10.1111/joca.70076

Authors: David Frisvold, Phuong Nguyen‐Hoang, Christopher K. Odinet

Institutions: University of Iowa, Texas A&M University School of Law

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: No poverty

Open Access status: hybrid

Estimated APC paid: $3,350