Temporal Income Smoothing: Experimental Comparison of Lump-Sum vs. Frequent Micro-Payments in Poverty Alleviation

Karasek et al. (2023) showed EITC timing affects perinatal outcomes, while Rizvi et al. (2024) noted that basic income experiments rarely test payment frequency. This RCT randomizes low-income households into three groups: (1) annual lump sum (standard EITC-style), (2) monthly micro-payments, or (3) weekly micro-payments. We measure effects on stress biomarkers, medical debt, job retention, and "gig economy" participation. Unlike prior studies focusing on eligibility timing, this manipulates payment cadence to test income-smoothing theory. It directly extends Karasek et al.'s trimester findings to behavioral economics: frequent payments may reduce cognitive load (per Bandura’s resource conservation theory) and enable proactive investments. If frequent transfers outperform lump sums, it could reshape tax-credit and basic income designs globally.

References:

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