Guaranteed Income as a Tool for Financial Liberation and Debt Reduction

• In Event: Beyond the Score: Innovative Approaches to Consumer Debt, Creditworthiness, and Financial Resilience

Abstract

Background: Black women in the U.S. have long faced entrenched economic precarity due to racial capitalism, exclusion from wealth-building opportunities, and extraction through predatory financial practices. While safety net programs have aimed to mitigate poverty, they often penalize upward mobility, leaving Black women particularly vulnerable. Guaranteed Basic Income (GBI) programs—offering unconditional cash transfers—have emerged as an equity-focused alternative to traditional welfare. “In Her Hands” (IHH), a GBI pilot in Georgia, was co-designed with community members, aiming to improve their financial stability, reduce reliance on high-cost financial services, and support long-term goals.

Methods: The IHH evaluation uses a mixed-methods design with a quasi-experimental structure. Participants were randomized into control and two treatment groups receiving a) a $4300 lump sum in month one and $700 per month for another 23 months or b) 24 $850 monthly payments. This paper draws on survey data collected at baseline and again after 24 months of participation. Key outcome measures include the use of alternative financial services (AFS), levels of debt and savings, presence and duration of emergency funds, and educational savings behavior. Longitudinal linear probability and OLS models were employed to assess changes over time, accounting for covariates such as household composition, age, site type, and income.

Findings: At baseline, treatment and control groups were demographically similar, though treatment recipients reported higher financial insecurity. By 24 months (Wave 4), participants receiving GBI were significantly less likely to use high-risk AFS products such as payday loans, pawn shops, and plasma sales (p < .01). Treatment group members were also significantly more likely to report having an emergency fund (Wave 4 treatment effect: +22 percentage points, p < .001), average general savings were over $370 higher (p < .001), and $616 more (p < .05) average savings for children’s education than in the control group. While total debt levels showed no significant reductions overall, there was a trend toward lower auto and medical debt among treated participants. Importantly, the intervention was associated with an increase in savings for children’s education, particularly among those with two adults in the household.

Discussion:
These preliminary findings indicate that guaranteed income has measurable effects on financial security and coping capacity among low-income Black women. Even modest, regular payments reduced the use of harmful financial products and increased the likelihood of holding savings—key indicators of financial resilience. The fact that participants reported greater ability to save for emergencies and invest in their children’s futures suggests that GBI may serve as a powerful tool for disrupting intergenerational cycles of economic instability. These findings align with prior qualitative research showing that recipients of GBI often use funds to stabilize their financial footing and pursue longer-term goals.

Author

• Haotian Zheng, Washington University in St. Louis
  Presenting Author