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Dignity and Dreams: What the Earned Income Tax Credit (EITC) Means to Low-Income Families


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Money has meaning that shapes its uses and social significance, including the monies low-income families draw on for survival: wages, welfare, and the Earned Income Tax Credit (EITC). This study, based on in-depth interviews with 115 low-wage EITC recipients, reveals the EITC is an unusual type of government transfer. Recipients of the EITC say they value the debt relief this government benefit brings. However, they also perceive it as a just reward for work, which legitimizes a temporary increase in consumption. Furthermore, unlike other means-tested government transfers, the credit is seen as a springboard for upward mobility. Thus, by conferring dignity and spurring dreams, the EITC enhances feelings of citizenship and social inclusion.
Content may be subject to copyright.
American Sociological Review
2015, Vol. 80(2) 243 –267
© American Sociological
Association 2014
DOI: 10.1177/0003122414551552
Means-tested government programs can stig-
matize their beneficiaries and carry social and
psychological costs alongside their economic
benefits (Edin and Lein 1997; Rogers-Dillon
1995; Rosier and Corsaro 1993). Temporary
Assistance for Needy Families (TANF), the
core welfare program in the United States, has
this effect (Stuber and Kronebusch 2004; Stu-
ber and Schlesinger 2006). However, there is
now one relatively generous, wide-reaching,
means-tested government program that instead
creates feelings of social inclusion, in part by
fueling recipients’ hopes and plans for future
upward mobility. The Earned Income Tax
Credit (EITC), a refundable federal tax credit
for lower-income workers, now lifts more chil-
dren out of poverty than any other government
program (Greenstein 2005; Greenstein and
Shapiro 1998; Holt 2006, 2011). The way the
EITC is targeted and distributed imbues this
money with a social meaning: namely, a just
reward for work, an opportunity for upward
mobility, and a chance to provide recipients’
children with some of their “wants” and not
551552ASRXXX10.1177/0003122414551552American Sociological ReviewSykes et al.
aMichigan State University
bEmmanuel College
cJohns Hopkins University
dUniversity of Wisconsin-Madison
Corresponding Author:
Jennifer Sykes, James Madison College, Michigan
State University, 842 Chestnut Road, 359 North
Case Hall, East Lansing, MI 48825
Dignity and Dreams: What
the Earned Income Tax Credit
(EITC) Means to Low-Income
Jennifer Sykes,a Katrin Križ,b Kathryn Edin,c
and Sarah Halpern-Meekind
Money has meaning that shapes its uses and social significance, including the monies low-
income families draw on for survival: wages, welfare, and the Earned Income Tax Credit
(EITC). This study, based on in-depth interviews with 115 low-wage EITC recipients, reveals
the EITC is an unusual type of government transfer. Recipients of the EITC say they value
the debt relief this government benefit brings. However, they also perceive it as a just reward
for work, which legitimizes a temporary increase in consumption. Furthermore, unlike other
means-tested government transfers, the credit is seen as a springboard for upward mobility.
Thus, by conferring dignity and spurring dreams, the EITC enhances feelings of citizenship
and social inclusion.
Earned Income Tax Credit, economic sociology, poverty, working poor
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244 American Sociological Review 80(2)
just their “needs.” This meaning encourages
spending patterns that create feelings of social
inclusion and citizenship.
We argue that the EITC avoids the pitfalls
typical of means-tested programs in three
ways. First, it is delivered via a universal
system—the Internal Revenue Service (IRS)—
as opposed to one reserved for stigmatized
groups, like the welfare office. Second, it is
targeted to members of a highly valued
group—working parents. Third, it comes in a
once-a-year lump sum at tax time, enabling
patterns of spending and saving that are not
possible during other times of the year. Fol-
lowing Zelizer (1989, 1997), we find that this
combination of factors gives these dollars a
particular social meaning, shaping recipients’
allocations of the money. The incorporating
effect of the EITC—in contrast with TANF or
its predecessor, the Aid to Families with
Dependent Children program (AFDC)—is
visible in the narratives of dignity and dreams
recipients offer to explain how they allocate
the money.
Citizenship is more than the formal rights
a state grants to those within its territory
through legislation and social policy. Citizen-
ship is actualized in interactions with repre-
sentatives of the state and in social processes
through which people can gain “substantive
citizenship” (Nakano Glenn 2010:2; see also
Haney 1996, 2002; Korteweg 2006). Con-
versely, through these interactions, feelings of
incorporation or citizenship may also be
denied to individuals who have the legal
rights of citizens but behave in ways at odds
with community norms. For example, stigma-
tized means-tested programs can create social
exclusion, withdrawing a central element of
citizenship: social rights standing that comes
alongside civic and political rights (Marshall
1950). Marshall explains that this dynamic
may arise as a consequence of the “psycho-
logical class discrimination” accompanying
some government sources of economic sup-
port. Targeted programs, as opposed to uni-
versal programs, are most likely to result in
exclusion from full citizenship. We find here,
however, that even means-tested programs
targeted at disadvantaged groups may foster
feelings of social inclusion.
Cultural sociologists have long argued that
one dollar is not necessarily equivalent to
another; rather, each carries a social meaning
that shapes its uses and social significance. As
Zelizer (1997:211) argues, “multiple monies
matter; they [are] powerful, visible symbols
of particular types of social relations and
meanings. But they are more than that; they
directly affect social practices.” Our analysis
extends this framework to the major cash
income streams on which low-income fami-
lies with children typically rely: wages,
TANF, and the EITC.
Although the EITC is now by far the larg-
est cash transfer to the poor, we know little
about how the money is perceived. In the
present study, we draw on 115 in-depth inter-
views with an ethnically and racially diverse
pool of lower-income household heads who
received a substantial EITC refund (at least
$1,000) in the late 2000s. We examine how
recipients view the EITC, how they allocate
these funds, and what meanings they attach to
this money. We find that program beneficiar-
ies prize the EITC for providing substantial
relief from the financial stress of unpaid bills
and debt, both long-standing credit card debt
and shorter-term financial obligations that
accumulate throughout the year. But recipi-
ents also believe the EITC is a just reward for
their labor as workers, which justifies a tem-
porary increase in consumption among house-
holds whose spending is highly constrained
during the rest of the year. In addition, they
see the EITC as a unique opportunity for
upward mobility and devote a considerable
sum to asset accumulation.
These allocation decisions, we discover,
are about much more than dollars and cents;
indeed, they are evidence of feelings of social
inclusion that are fueled by the refund check.
The meaning of EITC dollars is unique in the
budgets of lower-income families. Wages and
welfare dollars are slotted for monthly neces-
sities, as opposed to investments in long-term
dreams or spending on special treats that
receipt of the EITC allows. Parents make
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Sykes et al. 245
paying down debt a priority at tax time, as
they see it as the first step on the path toward
upward mobility. Few retire much debt during
the rest of the year. Building assets—investing
in durable goods and building up savings—is
usually possible only at tax time. These allo-
cations also bolster parents’ beliefs that they
are moving ahead. But recipients also reserve
a modest sum to indulge their children’s
“wants” and not merely their “needs” when
the refund check comes. Allocating some of
the EITC in this way makes their children feel,
as one mother says, like “ordinary kids,” and
the adults like “real Americans.” As a result,
the EITC is a means-tested government assis-
tance program that buys its beneficiaries at
least partial access to the social rights of
The phrase “if you work, you should not be
poor,” was a hallmark of President Clinton’s
antipoverty policy. In 1993, Clinton per-
suaded Congress to make that promise a real-
ity for millions of Americans by roughly
tripling the EITC. A small EITC had been
initiated in 1975 to offer modest tax relief to
low-wage workers. During the 1980s, the
credit was modified several times to compen-
sate for a series of regressive state sales tax
hikes. After a further expansion in 1991, Clin-
ton used the budget reconciliation process to
expand the EITC dramatically in 1993. The
new credit was constructed so that full-time,
year-round workers with dependent children
would rise above the poverty threshold. Fur-
ther temporary expansions for large families
were enacted in the American Recovery and
Reinvestment Act (ARRA) of 2009 and the
American Taxpayer Relief Act of 2012,
extending through at least the 2017 tax year.1
By 2011 (the most recent tax year for
which data are available), this fully refunda-
ble credit offered $55 billion in reduced taxes
and refunds to 26 million taxpaying house-
holds (IRS 2012). The take-up rate of the
EITC among those eligible is high—over 75
percent. Plueger (2009) notes that the rate
increases to 81 percent take-up among work-
ers who live with children and receive a much
larger credit (see also Leftin, Eslami, and
Strayer 2011). The amount of the credit varies
by household income and family size but
averages just over $2,000 and can provide as
much as $5,751 annually to a single parent of
three who works full-time, full-year, and
earns between $12,780 and $16,690 per year.
Benefits increase gradually as earnings rise
from $1 to $12,780 and decline as earnings
rise from $16,691 to $43,998.2 Families often
get additional refundable tax credits on top of
their EITC, including the federal Child Tax
Credit (worth up to $1,000 per child) and, in
some states, a modest state EITC.3,4
By contrast, the main cash welfare pro-
gram in place today, TANF, provided less
than $10 billion of direct assistance in 2009,5
when 1.85 million families were on the rolls
at any given time (U.S. Department of Health
and Human Services 2010).6 TANF benefits
are typically so low that recipients remain
below the poverty line, whereas the EITC
currently lifts nearly 7 million individuals out
of poverty, including 3.3 million children
(IRS 2011a).7
The EITC is designed to promote and sup-
port work, particularly among adults with
dependent children. Millions of single moth-
ers have been drawn into the workforce
because of its work-conditioned benefits
(Chyi 2012; Eissa and Hoynes 2006; Eissa
and Liebman 1996; Hotz and Scholz 2003;
Meyer and Rosenbaum 2001). Workers with-
out children can claim only a small credit,
with a maximum of $464 in 2011 (IRS
2011b); only 5 percent of EITC dollars go to
adults without children (Meyer 2010).
Each year at tax time, billions of dollars
flow into low- and moderate-income commu-
nities via the EITC and other tax credits (Holt
2011). Garr and Kneebone (2011) find that in
2007, 60 percent of refund dollars went to the
country’s 100 largest metropolitan areas.
Between 1999 and 2007, areas experiencing
the greatest increase in their low-income pop-
ulation saw EITC receipt rise in response.
The credit has been highly responsive to
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246 American Sociological Review 80(2)
changes in the geography of poverty in the
United States, and its receipt in concentrated
geographic areas has ripple effects on local
economies as businesses jockey for recipi-
ents’ refund dollars.
Most past research on the EITC focuses on
recipients’ plans for the allocation of EITC
dollars (Rhine et al. 2006; Smeeding 2002;
Smeeding, Phillips, and O’Connor 2000;
Spader, Ratcliffe, and Stegman 2005). Some
work focuses on actual allocations, either
directly via surveys (Barr and Dokko 2006;
Robles 2007; Shaefer, Song, and Shanks
2013; Spader et al. 2005) or indirectly via
Consumer Expenditure Survey data (Good-
man-Bacon and McGranahan 2008). Other
work compares low-income working moth-
ers’ spending before and after the early-1990s
expansions (Gao, Kaushal, and Waldfogel
2009). Although these studies do not offer a
full accounting of the EITC dollars devoted to
various ends, as we do, they do show that
EITC dollars are used for multiple purposes,
including current consumption, back bills and
debt, savings, and investments in assets and
No study we know of examines in detail how
the meanings recipients assign to money from
the EITC differ from the meanings of money
from other sources, or how these meanings
shape allocation patterns. We know of only
two studies that address these issues. In the
mid-1990s, Romich and Weisner (2000)
interviewed 42 low-income, single-parent
families who were participating in a welfare-
to-work program about how they used their
EITC and what benefits they felt they derived
from it. Most respondents said the refund
offered substantial financial relief. They also
found that many recipients aspired to save
some of their refund, and those who did usu-
ally had a major financial goal in mind, such
as a home purchase.
Another analysis of data gleaned from
these same 42 respondents, conducted by
Duncan, Huston, and Weisner (2007), focused
on how respondents used non-EITC wage
supplements and other in-kind benefits pro-
vided by a welfare-to-work program. Partici-
pants felt these supplements and benefits
enhanced their efforts to parent their children
responsibly. For example, they felt more
financial freedom to choose the type of school
(parochial instead of public) they thought
would be best for their children. In addition,
Duncan and colleagues (2007:86–87) found
that “parents and children [who received
these benefits] generally took great pride in
being typical consumers—going to the mall
or a fast-food restaurant, buying new clothes
instead of thrift store specials, buying furni-
ture, or purchasing a reliable used car.”
Given the policy focus of these analyses,
however, we can glean only hints about
what meanings these low-income workers
ascribed to this money and how these mean-
ings may have shaped their allocations. Nor
do these studies tell us whether respondents
viewed the EITC similarly or differently from
other monies coming into their household—
specifically, TANF and earnings. As outlined
earlier, we contend that particular features of
the EITC—its delivery through a universal
disbursement system (the IRS), its connection
to one’s identity as a worker and not a depend-
ent, and its form as a lump sum—shape the
social meaning of this money, recipients’
allocations, and their resulting feelings of
Previous research across economics and
sociology provides a foundation for this argu-
ment. Studies in behavioral economics
explore how people’s financial thinking is
dramatically altered by the mode in which
they receive money (Shefrin and Thaler 1988;
Thaler 1990). That is, someone may conceive
of and allocate $12,000 quite differently
depending on whether it is received as a one-
time windfall or in regular monthly incre-
ments of $1,000 throughout the year. Research
in this area challenges the traditional eco-
nomic assumption that, as a fungible resource,
every dollar is interchangeable. Even though
a person receives $12,000 in both instances,
the way it is delivered affects how people
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Sykes et al. 247
think about the money—whether they con-
sider it current income, future income, or
wealth (Shefrin and Thaler 1988). Arkes and
colleagues (1994), for example, show that
windfall money is more likely than regular
earned income to be spent quickly (see also
Hodge and Mason 1995). People’s propensity
to spend rather than save a windfall depends
on whether the money is viewed as a boost
over and above their regular financial situa-
tion or a rebate that lifts them back to their
normal economic position (Epley and Gneezy
2007; Epley, Mak, and Idson 2006; see also
Kahneman and Tversky 1979; Thaler and
Johnson 1990). In addition, spending of wind-
fall dollars is contingent on whether house-
holds are operating under conditions of
constraint. Although households across
income levels tend to spend rather than save
such money, households with lower incomes
and assets save a lower proportion of windfall
dollars than do the more financially advan-
taged (Johnson, Parker, and Souleles 2004).
Sociological research has brought addi-
tional nuance to this work in behavioral eco-
nomics. Zelizer (1979, 1989, 1996, 1997)
argues that it is more than the delivery
method—lump sum or incremental payments—
that shapes people’s allocation decisions. As
Zelizer shows, money has a “social meaning”
that is determined by broader cultural forces,
activated, for example, by who provides the
money and whether the money is seen as a
gift, an entitlement, or compensation. If
$12,000 is received as part of an annual
alimony payment, it is likely to be seen and
spent quite differently than if it is inherited
from a beloved grandmother or won in a slot
The EITC is received in a lump sum at tax
time, delivered through a universal (and non-
stigmatized) disbursement system, and tied to
social roles with a positive valence. This
gives the tax refund check a social meaning as
a reward for work and an opportunity to live
aspirationally—spending and saving toward
an upwardly mobile future. Today, the largest
means-tested cash assistance program for
families with children (the EITC) serves not
to exclude but to incorporate needy house-
holds into the fabric of mainstream society.
Although it targets the economically disad-
vantaged, it is less like TANF and more like
Social Security, which is also tied to work
(Ellwood 1988; Lieberman 1995). As Esping-
Andersen (1990:23) writes, “The welfare
state is not just a mechanism that intervenes
in, and possibly corrects, the structure of
inequality; it is, in its own right, a system of
stratification. It is an active force in the order-
ing of social relations.” Esping-Andersen
argues that means-tested programs reify or
even exacerbate market-driven stratification,
but the EITC works in a more positive and
unexpected way, providing an opportunity for
incorporative consumption. This article
details recipients’ allocation patterns, reveal-
ing the logic behind their spending and saving
and its social-psychosocial consequences.
This analysis draws on in-depth, semi-
structured interviews with 115 EITC recipients
with at least one qualifying child. Interviews
occurred in 2007, focusing on respondents’
2006 tax filings. A team of trained and experi-
enced qualitative researchers, including the
authors, conducted the interviews.
We constructed a diverse sample in terms
of race (white, black, and Hispanic), filing
status (married and single), and filing method
(for-profit preparer, nonprofit preparer, and
self-filed). We used a two-stage process to
identify a group of EITC recipients with
minor children in the Boston area who would
vary along these dimensions. First, we fielded
a short survey at random sampling intervals
during tax season at two H&R Block facilities
in different sections of the city, at two non-
profit tax preparation sites in the same neigh-
borhoods, and at eight Head Start centers
across the city during and after tax season. We
chose our sites based on the racial and ethnic
composition of their clientele, seeking a bal-
ance of sites located in lower-income white,
black, and Latino areas of the city. Individu-
als who said they had filed an Earned Income
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248 American Sociological Review 80(2)
Credit schedule had often just filed their taxes
at the time of the survey, and so could double-
check against the paperwork they had in
hand. They were then invited to participate in
a short survey inquiring about their refund
amounts and how they anticipated spending
those refunds.8 Respondents with dependent
children whose federal and state refunds
totaled more than $1,000 were also asked to
give their consent to be contacted for an
intensive interview scheduled approximately
six months after they filed their taxes.
To draw an in-depth interview sample, we
stratified the survey sample (N = 322) by
race/ethnicity and marital status to obtain a
sample of 120 households, evenly divided
between blacks, whites, and Hispanics, with
about two-thirds of each racial group filing
their taxes as single and one-third filing as
married (see Tables 1 and 2). We intentionally
selected more single than married tax filers to
account for the fact that approximately three-
quarters of EITC recipients file as single or
head of household (Eissa and Hoynes 2011).
We did not explicitly stratify the sample by
tax filing method. Instead, we relied on our
diverse modes of survey sample collection to
generate sufficient variety. Nationally, about
two-thirds of EITC filers use for-profit pre-
parers (Annie E. Casey Foundation 2005);
our sampling strategy yielded 70 percent for-
profit users. Only a tiny proportion of filers
nationwide use a nonprofit preparer; our sam-
ple is over-representative in that regard (22
percent of our respondents used a nonprofit
compared to 1.6 percent of EITC claimants
nationwide [Holt 2011]).
Response rates for both the initial surveys
and the intensive interviews were high. Pre-
cise response rates for the initial survey phase
are difficult to calculate and interpret, because
potential respondents approached at tax prep-
aration sites could refuse to participate either
because they did not receive the credit or
because they did not want to participate in the
study. However, the offer of $10 for taking a
two-minute survey generated great enthusi-
asm at the sites. The handful of potential
respondents who said they received the credit
but declined to participate in the survey
explained, for example, that they were at the
tax preparation offices only to pick up their
refund check and could not participate
because they were double-parked or had a
taxi waiting outside. Among those we sur-
veyed and asked for permission to contact
again for participation in the intensive inter-
view, only nine refused.
We conducted semi-structured interviews
with a stratified random sample of initial sur-
vey respondents roughly six months after
they received their refund checks. All but five
of those selected for the in-depth interview
agreed to participate. All interviews were in-
person and over 90 percent took place in
respondents’ homes. The remainder took
place in public locations such as a restaurant,
park, or library. Study participants received
an honorarium of $60 for participation. Inter-
views averaged 2.5 hours, ranging from 1.5 to
4.5 hours. All interviews were audio-recorded,
transcribed, coded, and systematically ana-
lyzed for common patterns and themes.
The in-depth interviews elicited quantita-
tive and qualitative data. We collected detailed
monthly income, expenditure, savings, and
asset information from the past year. We used
this information to construct a nine-month
budget for the months respondents were not
receiving or typically spending their EITC.
We also collected information about the
receipt and allocation of the tax refund and
constructed respondents’ three-month budg-
ets, which covered the period when the refund
was received and usually fully allocated. We
also asked open-ended questions exploring
how families managed their complex finan-
cial lives and how and in what circumstances
they prioritized some expenditures over oth-
ers. We asked about their attitudes and beliefs
about savings, asset building, and debt; we
also asked questions that gauged their general
financial knowledge, future goals, and aspira-
tions. Our questions elicited rich descriptions
of home and work life, their housing and
neighborhoods, and family background.
In our analyses, we probed respondents’
refund narratives and their descriptions of
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Sykes et al. 249
Table 2. Annual Household Earnings Brackets, by Marital Status
Annual Earnings
Single (%)
(N = 75)
Married (%)a
(N = 40)
All (%)
(N = 115)
Less than $15,000 32 10 24
$15,001 to $20,000 33 8 24
$20,001 to $25,000 12 15 13
$25,001 to $30,000 7 10 8
$30,001 to $35,000 13 28 18
More than $35,000 3 30 12
Note: Marital status refers to respondents’ filing status with the IRS.
aTotal percentages do not equal 100 due to rounding.
Table 1. Sample Demographics of Study’s 115 EITC recipients
Sample Characteristics
(N = 115) Percenta
Black 40 35
White 40 35
Hispanic 35 30
Marital Status (tax filing status)
Married 40 35
Single 75 65
Mean Number of Children 2.46 N/A
Housing Status
Own 11 10
Rent-to-Own 2 2
Rent 21 18
Subsidized/Public Housing 69 60
Shared 12 10
Work Status
Full-Time 49 47
Part-Time 37 36
Combined Full- and Part-Time 18 17
Less than High School 16 14
High School/GED 16 14
Some College 39 35
Associate’s Degree 28 25
Bachelor’s Degree 12 11
Post-Bachelor’s Degree 1 <1
Welfare Status
Currently On 11 10
Ever On 59 51
Not Reported 45 39
Immigrant 40 35
aMay not total 100 percent due to rounding.
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250 American Sociological Review 80(2)
their larger financial lives to better under-
stand the meanings they attributed to the tax
credit and to other money streams, such as
cash welfare. Emergent themes about the
value recipients ascribed to the refund were
identified through inductive analysis of
respondents’ narratives regarding their tax
refund. We restrict our analysis here to the
four themes (described in the next section)
that were frequently discussed; each was
identified in at least half of the cases.
Although not queried directly, because it
was not the focus of the research project, we
also gleaned data on respondents’ perceptions
of acceptable uses for TANF dollars. Half of
our respondents were former recipients of
TANF, and nearly all respondents had strong
views about the program even if they had no
firsthand experience. In addition, we were
able to compare how the EITC was allocated
(the three-month budget) against how earned
income was allocated in the absence of the
EITC (the nine-month budget).
We talked with respondents at length about
their planned and actual allocations of the
refund. Inductive analysis of their open-
ended responses revealed that they saw the
refund as a special income stream. Our analy-
ses further identified four major themes in
how the credit was experienced: relief from
financial stress, enhanced consumption, the
possibility of upward mobility, and an over-
arching theme of social inclusion.
The EITC is a powerful force in the lives
of low-income working families with chil-
dren. For our typical respondent, the lump
sum refund was equivalent to roughly three
months of earnings and one-fifth of total
annual income. For most, it was by far the
largest single check they receive in a given
year. Although paid out at tax time, the EITC’s
reach extends over a far wider timeframe.
Respondents often anticipated the refund
throughout the year and thoughtfully ear-
marked portions of it for specific purposes.
Some said the EITC was like “hitting the
lottery,” an unexpected windfall. Some used
terms suggesting they considered the refund
“special money,” “found money,” or “treat
money.” Still others, aware that their depend-
ent children had made them eligible for the
credit, referred to it as “the kids’ money” or
“family money.” It also became clear from
their larger financial narratives that the EITC,
because of its lump sum feature, was often
considered a form of savings.
Most families we interviewed spent a por-
tion of their refund paying bills or debts; 25
percent of refund dollars went to such pur-
poses. (We discuss the theme of “relief ” in
detail in the next section.) Nearly all house-
holds in the study managed to reserve some
of the refund for discretionary expenditures—
often referred to as “rewards” or “treats.”
Parents relished the experience of making these
purchases—splurges they rarely indulged
during the rest of the year—and they delighted
in picking out Disney-brand clothing for the
kids, taking the family on a much anticipated,
albeit modest vacation, or eating out at a sit-down
restaurant. Although spending on such “treats”
seemed to confer vital social-psychological
rewards, it consumed only 11 percent of the
refund, on average.9 On average, recipients
saved 17 percent of the refund. Annual receipt
of the refund laid the foundation for larger,
long-term financial goals. Accordingly, many
recipients formulated concrete plans to build
assets and enhance their educational creden-
tials via their EITC, investing a portion of
their refund to do so, even at the expense of
other pressing financial needs. Spending for
these purposes constituted nearly 40 percent
of total allocations (Mendenhall et al. 2012).
Like their investments, respondents saw
paying down debts (and thus cleaning up their
credit) as a first step toward a brighter finan-
cial future. Spending on treats, usually for
their children, but sometimes for themselves
or the whole family (e.g., a trip to see rela-
tives), was an equally important part of the
equation. Such spending offered a chance to
momentarily live the more comfortable life-
style they were aiming to secure in the long
term through paying down debts, saving, and
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Sykes et al. 251
investing in assets. Both the modest present-
day indulgences and the larger future-oriented
financial investments they made via their
credit gave parents a feeling of inclusion—
social citizenship—that living month-to-
month, often in the red, did not.
Relief from Financial Stress
When asked what they valued most about the
EITC, the first thing participants usually men-
tioned was the palpable relief they felt when
they could finally make progress paying down
debts and catching up on bills. The theme of
financial relief emerged spontaneously from
82 of 115 respondents. The impulse to meet
their financial obligations was so strong that 61
percent of those who filed at H&R Block took
advantage of a rapid refund loan—a high-
interest advance against the credit provided by
the for-profit tax preparer—usually for the
expressed purpose of paying off bills and debts
or making a badly needed purchase just a few
days sooner.10 In our study, 2 percent of refund
dollars went to fees for such loans.11
Most respondents described living with
immense financial challenges—struggling
mightily to stretch their meager paychecks to
cover their monthly bills. Another analysis of
these data shows that for the average recipient
in our study, wages covered only 67.9 percent
of monthly expenditures; the rest had to come
from SNAP (Supplemental Nutrition Assis-
tance Program), cash contributions from rela-
tives and friends, child support, and, of
course, the EITC and other refundable tax
credits (Halpern-Meekin et al. forthcoming;
see also Edin and Lein 1997). Among our
respondents, 90 percent had some form of
debt, with 60 percent carrying credit card debt
(Halpern-Meekin et al. forthcoming; Tach
and Greene 2014). Not surprisingly, our anal-
ysis of respondents’ three-month budgets (the
three months following EITC receipt) and the
expenditure patterns they reported over the
rest of the year show that few were able to
make real progress paying down back bills or
outstanding debts, except at tax time. Many
respondents had a strong desire to get ahead
financially, and they pointed to debt as the
key barrier that prevented them from making
progress. Although we code these allocations
as “back bills/debts,” many of our respond-
ents believed that retiring their debts had a
mobility purpose.
Debts weighed heavily on respondents,
who described the psychological stress of
being hounded by bill collectors, the strain of
worrying that utilities, heat, or other services
might be shut off, and the fear they would
face an emergency that they could not handle
financially. Respondents said they felt anx-
ious about their back bills and debt, and they
reported feeling ashamed when bill collectors
called, often avoiding the phone calls and
resenting the constant reminders of their
financial shortcomings. Most respondents
had some long-term debt, and almost all accu-
mulated additional debt throughout the year
(e.g., falling several months behind on a heat-
ing bill).12
The tax refund allowed some respondents
to pay off certain debts in full—a feat that
was especially prized. Sharon Ingram, a
47-year-old black clerical worker with a
21-year-old daughter and a 15-year-old son,
paid off her credit card debt in full with her
refund. When asked how she decided to spend
her refund check, Sharon responded that she
prioritized paying off three credit cards:
Just get a little ahead of the game. Just get a
little ahead of myself. Just breathe a little bet-
ter. So that way when my checks were com-
ing into deposit, three out of four of my bills
were already paid. What a feeling! And now
I could sit on that. It made it a lot easier.
In other cases, respondents paid off just enough
debt to keep their creditors at bay, spreading
the remaining refund money among other allo-
cations, including savings. On average,
respondents spent 25 percent of their tax refund
dollars paying down back bills and debt.13
Given their financial situations, it is hard
to overstate the sense of financial relief
afforded by the ability to pay down debt.
Carla Daniels, a 53-year-old black mother of
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252 American Sociological Review 80(2)
two step-children (who had been living with
her full-time), was working at a temp agency
and in the process of getting a divorce when
we interviewed her. She told us,
All I was thinking about was survival. All I
was thinking about was, “What do I need to
do to save this family from eviction?” And
we were eligible for the Earned Income Tax
Credit. I said, “Thank you, God!” To be
honest, I was so thankful that we were eli-
gible because I knew that that was going to
keep us out of eviction court.
The refund prevented this family from being
evicted for unpaid rent, a debt created by
Carla’s husband’s drug addiction. Other
respondents used the refund to resolve debts
such as traffic and parking tickets or past-due
utilities.14 Lizann Moretti, a 42-year-old white
mother of two, did not have a job when we
interviewed her; the family had to rely on her
husband’s job installing insulation. She
described how the refund allowed them to
hold onto a major asset—their home:
I paid five years’ worth of taxes [with the
refund]. It was almost—it was close to
$4,000. . . . Yes! Do you know how I felt
after I paid ’em? I was like Oh my God! It
felt so good. Cause [I said to myself ], “Oh
my God, if I wait any longer . . . we’re not
going to own the house anymore. They’re
going to [take it from us].” I felt like, “Oh
my God, the more I wait, we’re going to
have a serious problem.”
The Morettis spent most of their refund solv-
ing a “serious problem” and preserving a key
family asset—and they were not alone. San-
dra Rose, a 43-year-old Hispanic single
mother of two, works as a home health aide.
She fell behind in paying her utilities, leaving
her worried that her gas and electricity might
be shut off. The refund allowed her to pay
$2,000 toward these overdue bills. When
asked what might have happened without the
tax refund, Sandra replied, “Uf ! I’d have to
go live down [under] the bridge.”
Many respondents shared this relief of
“catching up” on outstanding bills. Michelle
Tavares, a 25-year-old black mother, cares for
her 19-month-old son while her husband
works as a cable installer. The family had
recently fallen behind on several household
expenses, so the refund offered a reprieve
from the normal financial press:
Well, what I was excited about [when I
received our tax credit], I was like, okay, I
calculated everything. . . . I was behind on
my cell phone. [I said,] “I can pay my cell
phone! I can pay my electricity! I can pay
little things. I owe money on my son’s
insurance. I can pay that.” . . . And then I
wanted to have leftover money to save. So
we were thinking we could put a thousand
in the bank and save it. But [all but $300]
ended up going towards paying bills. . . . We
had to do stuff [so] that we knew [they]
wouldn’t get shut off. I mean, you . . . have
to think of basic needs for your kid. I have
to think about his shelter and stuff.
For Lizann, Sandra, Michelle, and so many
others, the tax refund check offered a chance
to make major strides in emerging from under
a cloud of debt. Such payments brought a
sense of relief. It would have been nearly
impossible for these parents to pay down
debts and back bills without their refunds;
they found making so much progress on their
debts all at once quite gratifying.
Enhanced Consumption
Among EITC recipients we interviewed, typi-
cal occupations included waitress, personal
care attendant, salesperson at Radio Shack,
childcare worker, bus monitor, disability van
driver, maintenance crew, and cashier at
Dunkin’ Donuts. Others worked low-level
jobs in nursing homes, hospitals, and home
health care. These jobs paid poorly, and
respondents seldom found them intrinsically
rewarding. Many respondents also worried
about job security, losing hours, or the limited
career ladders within their organizations. For
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Sykes et al. 253
many, the tax refund seemed to provide a
sense their labor was rewarded—a feeling not
conferred by their wages or the nature of their
work. Recipients experienced this reward by
spending a modest portion of the refund on
“treats”—enhanced consumption of particu-
lar goods that satisfied the family’s “wants”
and not just their “needs.” These treats were
often items they associated with a more com-
fortable life.15
Many times, in accordance with the view
that the EITC was “the kids’ money” or “fam-
ily money,” parents were most eager to satisfy
their children’s wants. Small splurges for a
Dora the Explorer bedspread or a Bob the
Builder lamp added considerably to their feel-
ings of adequacy as parents. A white, single,
23-year-old food service worker and mother
of three, Claire Haynes, told us:
I was able to buy the kids something that
they were wanting. You know, I can’t do
that often. [My daughter] is like big into
Dora. Yeah, Dora is big in her life. So I was
able to get her the little wooden Dora table
and chairs. She sits there and eats dinner.
Purchasing the table and chair set was a high-
light not just for Claire’s daughter, but for
Claire herself. Being this kind of parent—one
who can buy special items her children
relish—was a special treat for Claire and one
that she “can’t do that often.”
Respondents often emphasized that they
felt justified in allocating a portion of their
refund to treats because they worked hard and
felt they had earned the privilege to splurge in
these modest ways. Treats included consumer
goods—name-brand sneakers, cartoon charac-
ter bedspreads, a sought-after item of clothing,
a special toy, or a designer pocketbook—and
experiences—treating the kids to dinner at TGI
Friday’s, going to the movies, spending the
day at an amusement park, traveling to visit
friends or relatives who lived some distance
away, or taking an overnight trip to Cape Cod
or New Hampshire’s Lake Winnipesaukee.
The dollars spent on treats for children
offered powerful validation to parents’ identity
as providers. Parents particularly reveled in
special expenditures that made their children
feel they were “ordinary American kids” (see
also Pugh 2004, 2009). For example, Claire
Haynes, the mother of three quoted earlier, told
us that under normal circumstances,
Sometimes the kids get what they need, but
it’s not what they want. It’s what they need,
but they may not like it. So with this
[refund] money, I was able to take them to
[T.J. Maxx] and let them pick their clothes.
It might have been a couple of dollars more
expensive, or it might have been even dou-
ble the price, but the point was they got
what they needed and at the same time they
felt like a million bucks. Because they got
actually what they wanted. My kids felt like
a million dollars.
Debra McKinley, a 28-year-old, single,
white mother of two daughters, works at her
sister’s restaurant. As a reward for passing 4th
grade, Debra had promised her daughter a
chance to indulge in her favorite foods on a
trip to the “best seafood restaurant in Amer-
ica” on her birthday. Despite the fact that the
family lives in Boston, a city with many
excellent seafood restaurants, she felt that
only the Red Lobster chain qualified as the
“best in America.” The nearest Red Lobster
was in Connecticut, several hours away; ful-
filling her promise thus required an overnight
trip for the extended family. This is how
Debra described the experience:
For her birthday we went to . . . Red Lobster.
The hotel was $140, the Red Lobster bill—
there was so many of us—we spent over
$500 in Red Lobster. [But the] only price I
[care about] is [that] my nine-year-old spent
$68 on her meal and ate every bit of it.
Lisa Benson, who is white and engaged to
be married, has been raising her 14-year-old
daughter on her own. Lisa works two jobs, as
a waitress and an airport luggage transporter.
She cuts her expenses to the bone for most of
the year, but when tax time comes, she uses a
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254 American Sociological Review 80(2)
portion of her refund to share experiences
with her daughter that she associates with a
more comfortable lifestyle:
Well, [when the refund came,] me and my
daughter, we went out to a little lunch. We
went out to lunch a couple of times. Once to
Uno’s and once to Friday’s because we
wanted to try it out. . . . That’s what we did
a couple of times—go places that you don’t
go on a regular basis.
Just as for so many others, Lisa’s indulgences
were small, but they offered a chance to “try
out” a more affluent way of life that she could
not enjoy “on a regular basis.”
Beyond giving one’s kids a chance to have
special experiences like these, modest spend-
ing on treats can also stand as a symbol that
one is not living totally on the edge. Johanna
and Mack Clark, a white married couple with
two children, are a case in point:
Johanna: What we normally do . . . with
tax money, we try to take like at least
$500 and get ourselves things, like
sneakers and clothes for the year.
Mack: Yeah, we stock up for the year.
Johanna: The rest of the [year] it’s all
about the kids’ [needs].
Mack: Because sometimes I need a pair of
sneakers or something, and I don’t get
the $80 [ones]. [But at tax time], I go
buy myself something nice. I mean,
we’re not poverty stricken.
Mack’s last comment reveals that for him,
purchasing something “nice”—in this case a
pair of $80, name-brand sneakers—is a treat
unattainable most of the year. Setting aside a
portion of the refund to buy nicer sneakers is
one way Mack signifies, to himself and oth-
ers, that he’s “not poverty stricken.” This is a
clear example of how the refund makes
respondents feel their work is rewarded. What
is Johanna killing herself for at her job as a
medical assistant, this stay-at-home dad rea-
sons, if they can’t splurge a little at tax time?
Many respondents emphasized the impor-
tance of spending at least a little of the refund
at tax time on “something nice” (as opposed to
“needs”). Karen Lewis, a black single mother
of four, works as a clerk at a utility company.
Karen relished that the tax refund allowed her
to briefly spend money as if she lived “com-
fortably,” which she felt she deserved:
Just be able to look in the [news]paper [ads]
and say, “All right, I need that right now. I’m
going to get it!” Just having that money, extra
money like that, it’s a good thing! Just going
into the store and just basically buying what
you like, you know, not necessarily what you
need. . . . I’m 43 now. What have I done [for
myself]? I want to live comfortably!
For Karen, “living comfortably” means being
able to make purchases based on her prefer-
ences, not just her finances. Like many in our
study, Karen seems to draw significant social-
psychological benefits from the brief period
of elevated consumption she enjoys each
year.16 The value is not just in the utility of the
consumer items themselves; it lies in the
relief of not having to watch every penny or
carefully scrutinize each potential purchase.
These purchases are justified by the special
meaning the refund check carries, which per-
mits families to relax their normal penny
pinching. Parents associate this sort of spend-
ing behavior with being a full participant in
U.S. society. These allocations make people
feel they are part of the mainstream, instead
of just watching from the sidelines.
It is important to emphasize, however, that
only about one in ten dollars from the tax
refund was spent on treats. The value of this
spending is largely of symbolic rather than
substantive importance. For example, Latrice
Morris, a 28-year-old, married black woman
whose husband works at a food cart, refers to
the money she earmarks for treats as “crackers
and chips,” but she, like others, emphasizes that
she spends most of her refund “responsibly”:
[With this year’s refund we bought] a new
mattress. [Ours] was just old and it was giving
my husband a lot of back problems. . . . [Then,
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Sykes et al. 255
at] tax time, I always try to put money in my
kids’ [bank] accounts so they can have them
some little [savings]. In the past, my hus-
band always [needed] to do something with
his car. So [most of it is] usually [spent on]
something for the house, like some furniture
or something, and the car. . . . And then,
from there on it’s what I like to call crackers
and chips . . . hair, nails [and] “Oooh, [how
about] this new wig!”
Although the portion earmarked as “fun money”
or “crackers and chips” is relatively modest
dollar-wise, these allocations nonetheless seem
to confer significant emotional benefits for the
lower-income families we interviewed.
This, and not just the opportunity to relieve
financial stress, is why many respondents so
eagerly anticipated tax time. One respondent
exclaimed that “February, oh February!” was her
favorite time of year—better than Christmas,
even—for this reason. Tracy Sherman, a white
28-year-old single mother of two who works as
a medical coder, shared her daydreams:
I think about [the refund] all year long, you
know what I mean? It’s like “Oh, I can’t
wait until I get my tax money so I can do
this and that.” . . . You’re thinking of all
crazy things that you can spend it on: “Oh, I
can get a bigger TV!” or “I should go get a
laptop!” . . . But I mean realistically, it
comes at a good time at that point where
“Okay, I need to pay bills,” and everything
comes in perspective of what is a priority
and what you really need.
Like most recipients we interviewed, Tracy
does not actually engage in much self-indulgent
spending with her refund. Yet she dreams of
the frivolous purchases she could allow her-
self at tax time “all year long.” The lump sum
refund check means that making these pur-
chases is actually possible—lending realism
to her dreams—even if she ends up spending
in ways she considers more sensible. Beyond
actual consumption, indulging spending fan-
tasies offers a way of solidifying an identity
as more financially comfortable.
Although respondents often proudly
described themselves as workers, their nine-
month budgets typically revealed a complete
lack of wiggle room, leaving them with little
choice over how to spend their money. A pri-
mary reason why recipients feel it is accept-
able to engage in such spending is the often
strong notion that they deserve to exercise
some discretion with their refund because
they work hard all year. When describing the
portion of the refund they allocate for treats,
many were quick to point out, “I work hard!
I’ve earned it.” Recall Mack Clark, whose
designer sneakers purchase was justified
because “It’s not like I’m poverty stricken!”
Latrice Morris, who devotes some of her
refund to “crackers and chips,” noted that
during the rest of the year her paycheck is
entirely devoted to the monthly grind of bills.
But even in the face of pressing financial
needs, she ensures that some of the refund is
set aside for treats. In short, for Latrice, the
tax refund check is special money:
Tax time is the only time we know we’ll
come in with a lump sum. You know, enjoy
it! We always gonna pay the bills. There’s
always [going to be needs. But] I work!
There’s always gonna be a check coming to
pay bills. You know, [tax time] is the time to
get stuff that we normally can’t get all year
Latrice’s story illustrates what economists
and sociologists have maintained—the form
of money deeply affects its perceived func-
tion (Arkes et al. 1994; Shefrin and Thaler
1988; Thaler 1990; Zelizer 1979, 1989, 1996,
What some observers may deem profligate
spending of refund dollars did occur among
families in our study. One respondent pur-
chased a Coach purse at an outlet mall,
another bought her children a Wii, and one
couple spent the money on a destination wed-
ding in Florida. But these flashy forms of
consumption are the exception, not the rule.
In addition, the “treats” respondents purchase
often are not for themselves but for their
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256 American Sociological Review 80(2)
children, upon whom they wish to bestow the
experiences of “ordinary American kids” to
make them feel “like a million dollars.” This
speaks to a key impact of the credit—social
inclusion—and how parents purchase such
inclusion for their children in the form of
desirable consumer items.
Mobility Dreams
Respondents’ aspirations and plans regarding
social mobility are intimately tied to the
refund.17 While other money can rarely be
earmarked for such purposes during the rest
of the year, parents commonly view their
refund as offering this potential. Almost all
respondents described hopes that they would
be upwardly mobile. Many described their
hope of owning a home or saving enough for
their children’s college tuition. They hoped to
have enough discretionary income one day to
retire comfortably or to take their families on
vacation (including the pinnacle of U.S. fam-
ily vacations—Disney)—leisure rare among
the working poor (for further information, see
Mendenhall et al. 2012). Half of our respon-
dents linked such aspirations to their tax
refund, even though we did not ask about this
For most parents, building substantial sav-
ings was not possible most of the year—we
observed little savings behavior except at tax
time. Some respondents intended to save a
portion of their monthly earnings, but the
press of bills usually meant those intentions
translated into little—or no—actual savings.
One black, 40-year-old preschool aide and
mother of two, Devonne Jefferson, described
how hard it was for her to save from month to
month: “Some people [say you should save
every month]; they call [it saving] for a rainy
day. And you have to say, ‘What is a rainy day
when you’re poor?’ . . . Every day I get up to
go to work it’s a rainy day!”
Yet in spite of living “check to check”
most of the year, many recipients see the
refund check as their real chance to save,
purchase used cars or durable goods (major
appliances or furniture), invest in education,
or make home improvements, repairs, or even
purchases.18 Such pursuits were often explic-
itly tied to narratives about what it meant to
“get ahead.” Respondents often fantasized
aloud about the progress that saving one
year’s refund—or possibly several years of
refunds—would allow them to make toward
their larger financial goals—$15,000 or
$20,000 over just a handful of years. A sub-
stantial minority turned these dreams into
concrete plans and were making considerable
financial sacrifices to fulfill them. Unrealized
dreams, however, were more common.
As indicated earlier, families’ mobility
plans often centered around homeownership.
One Hispanic married couple, Pedro and
Agustina Rios, explained:
Agustina: We [are] planning to get a house.
It’s our dream. . . . I be planning it every
year. But the problem is when that
[refund] money get home, you are so tied
up in bills that, what I’ll do is pay bills.
Pedro: Well, we’re trying to save [next
year’s refund].
Agustina: I want to get a house.
Pedro: In order to be a family, we want to
get a house. [emphasis added]
Agustina: Yeah, make some barbeque [and
get] a swimming pool.
The Rios family hopes “every year” that the
refund’s lump sum will allow them to start
saving toward their dream of homeowner-
ship. Note that Pedro believes that buying a
house would allow them “to be a family.”
Agustin also imagines the classic U.S. pas-
time that having a home of their own would
offer: having a pool-side cookout.
Jacinta Estrada, a 26-year-old Hispanic
mother of four who works as a payroll coor-
dinator and lives with the father of her chil-
dren, has similar dreams:
I live basically from check [to check]—and
I rarely make it till [the end of the month on
my earnings] so I don’t have nothing saved.
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Sykes et al. 257
And I told myself, I was looking at this
[refund] for the next five years so we could
get a house. . . . I mean, maybe I’ll spend my
little state [refund] check but I don’t want to
touch my federal, I want to save it. I read
this article [that said] if you’re 26 right now
and you have zero saved . . . if you save
from right now $148 a month, by the time
you’re 65 you’ll have a million dollars.
Jacinta says she does not have the discipline
to cut that $148 from their already tight
monthly budget, so her plan is to put away her
federal EITC check, which is far larger than
the state EITC. Because she receives the
money in a lump sum, it feels possible to
build assets with this money, unlike with her
monthly income.
As we indicated earlier, mobility goals
sometimes prompt repayment of debt as a
necessary step prior to saving. One respond-
ent, who plans to buy both a car and a house
someday, said that first she has to use her
refund to pay off debt so she can improve her
credit score: “Just pay it off and be done with
it.” This is part of why being able to pay off a
debt in full is so valued—it feels like clear
progress toward longer-term financial goals.19
The tantalizing possibility of using the tax
refund to make substantial progress toward
savings goals each year nourishes a future ori-
entation. We refer to this as “mobility dreams”
because it represents strong hope that an
upward trajectory is possible, prompts some
degree of future planning and orientation, and
leads to significant allocations toward savings
(17 percent of the refund is saved initially) and
other investments (e.g., cars or educational
expenses).20 The form of payment (through the
U.S. Treasury at tax time) and therefore the
meaning of the tax refund check validates its
allocation to mobility efforts. Such allocations
are proof that the American credo is alive: hard
work can, and will, buy a brighter future.
Social Inclusion
That the annual tax refund check creates feel-
ings of social inclusion is evident in nearly
every respondent’s narrative. Our data show
that certain features of the EITC create a
meaning and utility that may well be unique
among means-tested cash assistance pro-
grams in the United States. Parents offered
descriptions of their consumption behavior as
evidence that their families were not at the
social or economic margins. As one mother
noted, “I mean, I don’t consider us poor.
We’re just like right there in the middle. Like
I never run out of pampers. Cause when I
have the money, I stock up on everything so
that when I am broke, I don’t need anything.”
Being “in the middle” and “not poor” was
mentioned by many respondents, even as they
described mounting bills and financial uncer-
tainty throughout the year.
Recipients understand the credit is available
to them as working parents, an identity they
and other Americans see as deserving.21 Most
respondents in this study believe they have
earned the refund through their work. The sys-
tem through which the EITC is delivered—the
IRS—does not designate beneficiaries as being
“on the dole.” Instead, the tax system’s univer-
sal reach renders this form of government
assistance nearly invisible. Americans across
the income spectrum receive refund checks
from the government at tax time. Furthermore,
the credit is included in one’s tax refund check
and is not a separate disbursement from the
government, muddling respondents’ sense of
how much might be a transfer or merely wages
that have been over-withheld. While welfare
recipients are outcasts—the target of stigma
and scorn—EITC claimants are customers of
H&R Block and Jackson Hewitt, side by side
with all the other hardworking taxpayers.
When refund checks come, there is no “scarlet
letter” on checks distinguishing individuals
who overpaid from those who are receiving a
government “handout.”
Finally, the refund’s lump sum nature is a
key part of the meaning respondents give it
and why they hope to allocate it to aspira-
tional purposes, like savings. A check for
thousands of dollars all at once makes achiev-
ing these dreams seem far more possible.
Simply feeling like they are on the path to
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258 American Sociological Review 80(2)
achieving these dreams offers parents an
identity and sense of social inclusion that
scraping by month to month does not. For
example, saving for a down payment on a
house, as one respondent notes, puts you on
your way to becoming “a real American”
(Halpern-Meekin et al. forthcoming).
These basic features of the EITC confer a
meaning on these dollars that encourages
recipients to use the money for special pur-
poses like buying treats and trying to invest in
the future. Perhaps that is why the EITC has
the ability to confer dignity and dreams that go
beyond its dollar value. No other means-tested
cash assistance program in the United States
has this array of features—features that simul-
taneously activate feelings of social inclusion,
substantive citizenship, and future orientation.
Even though parents often end up spending
much of their refund digging out from under
debt, there is a hopefulness associated even
with that act. First, with the slate wiped clean,
one can begin to build credit and save, which
families know are essential to their dreams of
upward mobility. Second, even if savings end
up diverted to the inevitable “rainy day” each
year, the thought of next year’s refund offers
what many recipients see as a realistic hope of
saving toward the future life they desire.
Receiving a means-tested transfer in the form
of a refundable tax credit does more than help
parents meet their pressing financial needs.
Parents feel justified in modestly increasing
their current consumption and hopeful about
their ability to leverage future tax refunds into
an investment they associate with upward
mobility. In addition, receipt of the tax credit
supports feelings of being a part of main-
stream U.S. society, a sign the credit has
enhanced, not diminished, claimants’ sense of
having the social rights of citizenship.
Contrasting respondents’ narratives around
their refund checks to their discussions of
welfare and wages magnifies the unique char-
acter of the refund in their financial portfo-
lios. For the typical respondent in our study,
earnings are dedicated to keeping up with
monthly expenses. Many respondents noted
that they could not “splurge” with their earn-
ings money throughout the year, which is why
“tax time” was special in their financial lives.
One mother of three noted that between pay-
ing rent, utilities, childcare, and some of what
she owed on her credit card, “my paycheck,
it’s gone before it gets here!”
Respondents also discussed cash welfare.
While only a small group of respondents
received TANF during the 12 months for
which we collected income data, 51 percent
said they had been on AFDC/TANF at some
point,22 and even those without such experi-
ence often had strong opinions about the
program. Past welfare recipients seemed to
feel they had to offer an excuse for their time
on welfare, even though we did not ask for
any such explanation. They proffered detailed
descriptions of the “unusual” circumstances
that had made them deserving of welfare—a
justification for why they really needed it. In
this way they distanced themselves from
other welfare claimants who they character-
ized as “lazy”—people who did not really
need the money as much as they themselves
had (Halpern-Meekin et al. forthcoming; see
also Hays 2004; Watkins-Hayes 2009). In
their view, cash welfare receipt was accepta-
ble only in situations of dire financial need;
respondents believed it ought to be spent
solely on basic needs. Spending a bit of the
EITC check on special treats, like a dinner
out, was okay. Spending a welfare check that
way was a moral failing.
Marissa Lopez, a 31-year-old Hispanic
single mother of three, was thankful her
mother helped her take care of her kids so she
could get her life together and get off welfare.
“I didn’t want to end up like everybody else
just sitting on welfare, getting welfare; it can
be addictive. You can get used to not doing
nothing and getting money. . . . I just didn’t
have the luxury of being able to sit on my
ass.” In Marissa’s words we see the
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Sykes et al. 259
stigmatizing view that welfare recipients “just
sit on welfare.” Pedro Rios, who we met ear-
lier, had experience with the welfare system
when his then-girlfriend (now wife) was
receiving benefits after they had their first
child. He pushed for her to get off the pro-
gram, noting, “I don’t want my kid [supported
by welfare]. . . . I would like to be clean. I like
to be honest. I like to be the way my father
and my mother bring me up.” Strongly
implied here is that receiving welfare is not
“clean,” “honest,” or a respectable option for
someone who has been raised right.
Parents’ stories about welfare tended to
emphasize their desire and effort to leave the
program as soon as possible, in stark contrast
to their descriptions of looking forward to
future EITC checks year after year. Welfare
appears to withdraw the social rights of citi-
zenship twice over—first, benefits are distrib-
uted via a stigmatized system in which clients
are, by definition, violating social norms of
work and self-sufficiency; second, the mean-
ing ascribed to welfare dollars precludes the
types of consumption (treats and allocations
associated with upward mobility) that bring
feelings of social inclusion.
In contrast, respondents believe the EITC
is a deserved reward for hard work. While
some of their tax refund might have to be
used for pressing financial needs, a portion is
usually set aside for the “wants” earnings can
seldom provide. Successfully saving might be
an unfulfilled aspiration during the rest of the
year, but when wages just will not stretch
beyond monthly expenses, the EITC forces
one to “save” (in that the government keeps
the benefits that accumulate all year, only
disbursing it at tax time). The amount one can
claim at tax time is often large enough to
inspire real confidence that larger financial
goals might actually be met. Although both
programs proffer cash benefits to claimants
who struggle to make ends meet, in stark con-
trast to TANF, EITC receipt connotes con-
formity with social norms, self-sufficiency,
and even pride.23
Respondents often described denigrating
visits to the welfare office. Visits to for-profit
tax preparers, in contrast, offer EITC claim-
ants a pleasant “customer” experience. In
fact, H&R Block’s advertising slogan,
“you’ve got people,” was referred to with
enthusiasm in interviews (e.g., “Hey, I’ve got
people!”). By disbursing benefits through the
tax system, which every working American
must access to meet tax obligations or claim
refunds, our respondents’ status as beneficiar-
ies of government assistance is rendered
invisible and their identities as workers are
affirmed (Currie 2008). They are among
legions of ordinary citizens who support their
families with their labor. What they receive
from the government at tax time is not a hand-
out, it is a well-earned reward for their
upstanding behavior. The program is thus
fully consistent with American values, which
depict work as proof of good citizenship.24
The nature of the social safety net in the
United States has fundamentally changed over
the past 20 years. The U.S. government has
sharply curtailed access to cash welfare;
instead, it now focuses on expanding benefits
to the working poor with dependent children.
In this study, we examine how beneficiaries
understand one of the largest programs in this
new public provision system, the EITC. Draw-
ing on research in behavioral economics and
cultural sociology (Arkes et al. 1994; Zelizer
1979, 1989, 1996, 1997), we go beyond a
simple accounting of dollar allocations to
examine the impact of the form of this means-
tested program on the social meaning its ben-
eficiaries ascribe to the dollars received and,
in turn, their meaning of how it is allocated.
Our findings contribute to several areas of
existing research. First, we show how the
design a particular policy takes can create
powerful meanings for the dollars disbursed.
Second, we show how the meaning attached
to these dollars can affect how recipients allo-
cate them. The EITC would likely be per-
ceived and used differently if it were
distributed in small monthly increments or
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260 American Sociological Review 80(2)
via the welfare office and not the IRS (or via
H&R Block or another for-profit tax pre-
parer). Our findings indicate that government
programs aimed at assisting families do not
need to be universal to avoid stigma, as long
as they are associated with behaviors most
Americans condone, such as work.
We identify four central themes in recipi-
ents’ perceptions of the EITC: relief, enhanced
consumption, upward mobility, and the over-
arching theme of social inclusion. Consistent
with previous research, we find that recipients
experience great financial relief from their
refunds (Romich and Weisner 2000). How-
ever, beyond its value in easing economic
stress, we also find that the refund is seen as
a deserved reward for work, and as such, a
portion is devoted to increased consumption.
While the extra consumption for “wants,” not
just “needs,” is modest, these purchases
appear to bolster recipients’ feelings of dig-
nity and self-worth. Our work builds on pre-
vious research that highlights how
consumption is a social—not just economic—
process that is important in shaping identity
(see Pugh 2009; Zukin and Maguire 2004).
Allocations reflect recipients’ perceptions
of the EITC as special money: a quarter is
devoted to debt and back bills. But debt pay-
off is often related, at least indirectly, to aspi-
rations for upward mobility, as retiring one’s
debt is often viewed as the first step to getting
ahead, especially toward purchasing a home.
About a tenth is reserved for extra consump-
tion, or “treats,” and most of the remaining
refund—nearly 40 percent—is deployed
toward allocations respondents relate directly
to upward mobility (usually the purchase of
durable goods and savings). Claims to dignity
and one’s sense of self-worth are strength-
ened when families can formulate concrete
plans for upward mobility and allocate some
portion of their EITC dollars toward realizing
their mobility dreams. Even the possibility of
reserving a subsequent year’s refund for such
purchases seems to do some good for families
who are too constrained to do so at present:
the EITC represents a hope of future savings
and mobility, which most recipients feel
would be nearly impossible without this large
By comparing the meanings respondents
ascribe to the EITC and TANF, the other main
cash assistance program available to low-
income families, the link between the credit
and social inclusion comes into sharp relief.
We find that receiving and spending the EITC
enhances feelings of social inclusion via con-
sumption and fostering mobility goals, whereas
cash welfare confers stigma and detracts from
well-being (Hays 2004; Watkins-Hayes 2009).
As Edin and Lein (1997) show, welfare recipi-
ents cannot make ends meet on their benefits
and must “cheat” to survive—hiding cash con-
tributions from friends and family and off-the-
books earnings from the welfare system.
Having to cheat the system to pay the bills
does not foster a sense of good citizenship,
offering shame instead. Conversely, the EITC
seems to bolster one’s sense of being part of
the U.S. mainstream—EITC recipients in our
study sometimes spoke directly about how
claiming the credit and making purchases with
their EITC dollars made them feel like they
were “not poverty stricken,” “in the middle,”
or like “real Americans.”25
Despite conventional wisdom about wel-
fare “cheats” (echoed by our respondents),
there has never been any strong evidence that
welfare recipients waste much of the meager
benefits they claim—indeed, research shows
that most welfare dollars are typically spent
on necessities (Edin and Lein 1997). This is in
keeping with the meaning our respondents
attached to this form of money: it ought to be
deployed only for what is genuinely needed;
anyone who spends it in a profligate manner is
seen as a moral degenerate. The wages of low-
income workers with dependent children, both
in this study and others (Edin and Lein 1997),
are also quite carefully deployed—but the
very care our respondents find they must
employ to make ends meet each month flies in
the face of the meaning they apply to earned
income. They believe conscientious wage
labor should reap enough to pay the bills with
some left over for modest discretionary con-
sumption and asset building. With their earned
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Sykes et al. 261
income not adequate to fulfill these purposes,
it is the EITC that fosters both dignity and
These findings have several limitations.
First, by necessity, there is a trade-off between
the depth of the data we gathered through
qualitative interviews and generalizability.
Our respondents’ experiences with the EITC
may differ from those of program beneficiar-
ies in another part of the country or recipients
who receive only a small refund check. Sec-
ond, there may be variation in program per-
ceptions and allocations within the population
of EITC recipients that are not obvious in a
sample of only 115. Third, because our sam-
ple is not representative of welfare recipients
or all wage earners, our conclusions may not
speak to the meaning of welfare or wage
income among people who do not receive the
EITC. Perceptions and allocation of wages
presumably differ, for example, among more
affluent wage earners who can engage in
more discretionary spending.
These data suggest the transition the
United States has made from need-based enti-
tlement to a work-based safety net may have
led to a true transformation in the U.S. wel-
fare state, at least with regard to low-wage
workers who are parents, in ways that offer
unique benefits. Parents’ narratives show that
feelings of worth and social inclusion flow
from modest spending on treats and dreams
of upward mobility. This is in keeping with
what Marshall (1950:72) describes as key ele-
ments of social citizenship, which range from
“the right to a modicum of economic welfare
and security to the right to share to the full in
the social heritage and to live the life of a
civilized being according to the standards
prevailing in the society.”
We argue that the EITC cultivates social
inclusion via four central features. First, while
in reality both EITC and TANF recipients are
drawing on government assistance, the identi-
ties that accompany the two programs differ:
worker versus dependent. Workers are seen to
be holding up their end of the social bargain.
Dependents are not. Second, the method of
delivery for the EITC and TANF differ.
Respondents describe a visit to the for-profit
tax preparer, where most EITC recipients file
their taxes, as a positive experience; they are
comforted by the professional atmosphere
and buoyed by being treated as a valued cus-
tomer and feeling like their tax preparer is “on
their side” should an audit occur. In sharp
contrast, they describe visits to the welfare
office as “degrading,” the caseworkers as
judgmental, and the “little bit of money” one
can claim each month as “miserable.” Third,
the credit is not received as a separate check
from the government, but rather as part of a
tax refund, which obscures the fact that it is a
means-tested cash assistance program.
Fourth, the fact that the EITC is paid out
once a year in a lump sum changes its mean-
ing for recipients (Arkes et al. 1994; Epley
and Gneezy 2007; Epley et al. 2006; Hodge
and Mason 1995; Johnson et al. 2004), open-
ing up possibilities for profligate spending
but also opportunities to build assets and
save. The arrival of a big check does allow
(and, in parents’ minds, justify) a modest tem-
porary elevation in the household’s consump-
tion of “treats.” But the lump sum nature of
the credit and the high value recipients attach
to this feature reinforce the notion that unlike
earned income, which recipients typically
devote almost entirely to current consump-
tion, a substantial portion of the refund ought
to be earmarked for long-term financial goals,
not short-term spending.
In summary, the EITC seems to bolster
recipients’ self-respect by emphasizing their
role as working parents. By allowing a mod-
est elevation in consumption of “wants,” it
gives a poorly remunerated job more social-
psychological payoff. Workers take pride in
the fact that, even if only for a few months,
they feel they can afford to buy a few extras—
a powerful signal to themselves and to others
that they are not “poverty stricken.” The
credit also stokes dreams for the future, which
may translate into concrete goals and alloca-
tion behaviors. The typical respondent’s
refund constituted roughly a fifth of their
annual income. This sum is large enough to
create the perception that over several years,
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262 American Sociological Review 80(2)
a family could make significant financial pro-
gress, such as saving for a child’s college
tuition or for a down payment on a home. Just
feeling that such dreams could become reality
seems to enhance recipients’ feelings of social
However, it is also true that the move away
from a system of need-based entitlements
(exemplified by AFDC, which ended under
the TANF program when access to benefits
was sharply curtailed) to a work-based safety
net doubly disadvantages individuals who are
not working. People without a job get nothing
from the EITC. In addition to the unem-
ployed, people without dependent children
(including noncustodial parents) and single
parents who choose to care for their children
at home (unpaid labor) are also largely
excluded. Today, only a minority of the non-
working poor—even those with children—
claims anything from the government. This
was true even during the Great Recession and
jobless recovery, suggesting deep flaws in our
safety net that must be addressed (Shaefer
and Edin 2013).
Of course, a point-in-time qualitative study
such as this cannot prove that the meanings
attached to the credit shape its allocation. We
only offer evidence of the strong correspond-
ence between the social meanings applied and
the allocation patterns observed. Thus, our
hope is that the hypothesis we advance here
sparks future research. For example, there is
variation in how states’ own EITC programs—
programs that offer benefits over and above
the federal EITC—are designed (e.g., whether
a credit is refundable) and administered (e.g.,
Virginia eliminated paper checks and offers
only direct deposit or benefits loaded on debit
cards). There is also variation between coun-
tries in how tax credits for low-income work-
ing parents are administered; for example, in
the United Kingdom, tax credits to low-wage
workers are paid out in small increments
throughout the year.26 Exploiting these
sources of variation could allow future
research to explore which features of these
programs activate particular social connota-
tions and spending patterns.
Our findings also raise important ques-
tions about the EITC, especially regarding the
long-term effects of receiving the tax refund.27
First, future research should consider whether
the meaning of the EITC may change over
time for recipients. For many, the financial
relief of paying off bills and paying down
debt is short-lived. The rewards of spending
on oneself or one’s children and briefly
becoming a less-constrained consumer are
also fleeting, and the larger hope of finding
more stable financial footing in the future is
often unrealized. Do recipients gradually
become disenchanted with the refund if, over
the long term, the EITC does not live up to
the dreams it fosters? Second, to what degree
does the EITC allow families to make head-
way on their debt over time, and to what
extent do they pay debt off at tax time only to
accrue more?28 Relatedly, when and in what
ways does the practice of setting aside some
of the money for treats—which appears to be
important in creating work incentives and
solidifying recipients’ identities as good
providers—come into conflict with recipi-
ents’ mobility dreams? Future research should
assess whether the self-worth and sense of
social inclusion and citizenship the credit
seems to provide translate into other prosocial
behaviors: better parenting, more law-abiding
behavior, higher levels of trust and social
cohesion, or more civic engagement.29
We are grateful to Christopher Jencks, Jane Mansbridge,
Tim Nelson, Stefanie Deluca, and the anonymous ASR
reviewers for their helpful comments on this article.
1. The ARRA temporarily expanded the EITC in sig-
nificant ways, increasing the credit for families with
three or more children and increasing the income
eligibility thresholds for married couples (IRS
2013; Meyer 2010).
2. The maximum refund for a single parent with
two children is $5,112; the plateau range in which
maximum benefits can be claimed is the same as
for a parent with three children. Benefits phase out
entirely at $40,964 for a parent with two children
(Tax Policy Center 2012).
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Sykes et al. 263
3. Fully 24 states now have their own EITC (Tax Pol-
icy Center 2012).
4. Until 2010, EITC recipients could receive a por-
tion of this tax credit spread out over the course of
the year (IRS 2010); however, nearly all recipients
(97 percent) elected to receive their entire EITC
payment as a lump sum at tax time (U.S. Govern-
ment Accountability Office 2007). Barr and Dokko
(2006) found recipients have a strong preference for
receiving the EITC as a single tax refund payment
rather than in monthly installments, in part due
to the additional effort involved in requesting the
advance EITC.
5. States diverted the rest of federal TANF alloca-
tions to other uses (U.S. Department of Health and
Human Services 2010).
6. See Eissa and Hoynes (2008) for information on
7. The Center on Budget and Policy Priorities (2011)
reports that for a family of four (a two-parent family
with two children) in which one parent is working
full-time and earning the federal minimum wage
and the other is not employed, the EITC and SNAP
benefits are both needed to lift a family above the
federal poverty line.
8. The survey was similar to the one used by Smeed-
ing and colleagues (2000).
9. Another 23 percent of refund dollars were devoted to
current consumption. Some of this spending might
prevent the accumulation of more unmet financial
obligations (i.e., the EITC may arrive in a month
during which earnings fall short of income). But
some substitution presumably occurs, which may
mean that families elevate consumption through
their re-allocation of earned income in months
where they use the EITC to pay their regular bills.
10. Most federally funded banks and tax preparers no
longer offer refund anticipation loans, a practice
that was severely curtailed by the FDIC in 2010.
However, clients at for-profit tax preparation ser-
vices are still offered similar costly financial prod-
ucts at tax time, such as refund anticipation checks,
personal lines of credit, and non-bank refund antici-
pation loans.
11. We believe this is an underestimate. Some clients
did not have their paperwork on hand and found
it hard to identify their total refund amount—they
merely recalled the amount of the check that the for-
profit tax preparer had issued. One study in Wash-
ington, DC found that over 10 percent of refund
dollars was spent on fees and rapid refunds—more
than $150 per filing unit (Berube et al. 2002).
12. Critics note this is one shortcoming of the EITC: it
does little to alleviate routine budget strains (Holt
13. For a detailed discussion of refund allocations, see
Mendenhall and colleagues (2012).
14. Debts such as federal taxes and child support are
garnished directly from EITC refunds.
15. Nearly all families in this sample had a cable TV
subscription and at least one cell phone. Many also
had at least intermittent Internet access at home.
While some might consider these items a luxury,
our respondents deemed them necessities.
16. Merchants target low-income consumers at tax time
with special offers; some stores even offer tax filing
services. It is unclear whether these practices are
particularly exploitative; we identified no research
documenting the prevalence of such practices tar-
geting lower-income tax refund recipients.
17. We use a broad definition of “mobility purposes”
borrowed from Smeeding and colleagues (2000): it
includes the money recipients save as well as spend-
ing on education, other durable goods, and debt
reduction. Including all of these components, 52
percent of the refund is spent on mobility purposes.
18. Interviews took place prior to the Great Recession
and the housing bubble bursting; respondents’ views
of homeownership may be different now, although
public opinion continues to strongly endorse home-
ownership despite the recent financial crisis (Pew
Research 2009; Taylor et al. 2011). One might well
question whether home purchase is a wise goal,
given the recent turbulence in the U.S. housing mar-
ket. Yet, saving for a home—or the purchase of cars,
durable goods, or educational expenses—was often
explicitly and strongly tied in respondents’ narra-
tives to notions of what it meant to “get ahead.”
19. Some observers may not consider debt payoff to
have a mobility purpose. We do not include items
such as Internet subscriptions or cell phones as
mobility spending, although both may be critical
to securing and maintaining a job. Our estimates of
the portion of the refund devoted to mobility is thus
20. Another analysis of these data, plus parallel data
drawn from another city, show that during the
Time 1 survey, 57 percent of respondents said
they planned to save at least some money. By the
time we interviewed these households in-depth six
months later, 39 percent said they had saved some
money initially (Mendenhall et al. 2012).
21. See Gilens (1999) for an explanation of the condi-
tions under which people are perceived as deserv-
ing of assistance; such perceptions are not unique
to higher-income people’s views of lower-income
people—they hold across socioeconomic strata.
22. This is likely an undercount of the prevalence of
welfare receipt in our sample. Because welfare
receipt was not the focus of the study, our inter-
views did not get a complete account of families’
experiences with welfare. For example, when we
interviewed only one member of a couple, we did
not seek information about the other partner’s wel-
fare receipt history.
23. Lamont’s (2000) research focuses on the use of
money and its meaning in boundary work. While
the need to draw boundaries between themselves
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264 American Sociological Review 80(2)
and the non-working poor may, in part, explain our
respondents’ emphasis on the importance of using
the EITC wisely, it does not explain why they define
(and spend) the EITC differently than money from
other sources, such as wages. Our account is consis-
tent with Zelizer (1989), who argues it is the prov-
enance of the money that marks it for special use.
24. See Korteweg (2006) for a detailed discussion on
the construction of gendered citizenship in light of
welfare reform, and Korteweg (2003) for more on
welfare reform’s advancement of the (masculine)
worker-citizen model.
25. While tax refund receipt is common among lower-
income working families, tax time does not seem to
have a collective or communal quality. We speculate
that limitation on the integrative quality of the refund
check experience is to be expected. First, the major-
ity of EITC recipients (as measured over time, as
opposed to cross-sectionally) do not receive the credit
year after year (Dowd and Horowitz 2011), which
could dampen any kind of collective experience.
Second, although buying treats is quite meaningful to
parents, most money, by a wide margin, is allocated to
spending such as paying down debt, buying a freezer
chest, or paying ahead on car insurance; such pur-
chases do not seem to have the makings for creating
feelings of community cohesion or celebration.
26. This is a particularly ripe area for future qualita-
tive research. For example, while Gregg, Waldfo-
gel, and Washbrook (2006) examine the allocation
decisions of U.K. recipients, we cannot determine
from their survey data whether the meaning of this
money is the same as in the U.S. context.
27. For example, EITC receipt has been tied to improve-
ments in maternal and infant health (Evans and
Garthwaite 2010; Hoynes, Miller, and Simon 2012;
Strully, Rehkopf, and Xuan 2010) and children’s
academic performance (Dahl and Lochner 2012).
28. While more research is needed, Shaefer and col-
leagues (2013) find indirect evidence that the EITC
may allow low-income single mothers to limit the
debt they accrue.
29. For further information about the potential of social
and welfare policies to affect civic behavior, see
Bruch, Marx Ferree, and Soss (2010), Campbell
(2012), and Swartz and colleagues (2009).
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Jennifer Sykes is an Assistant Professor of Social Rela-
tions and Policy at James Madison College, Michigan
State University. She studies poverty and inequality with
an emphasis on welfare policy, child and family well-
being, and child protection. Her current research exam-
ines how mandatory reporters and low-income parents
interact with state agencies in child protection matters.
Katrin Križ is an Associate Professor of Sociology at
Emmanuel College. Her research interests lie in the areas
of welfare policy; child welfare; the sociology of gender,
race, and class; and comparative/international sociology.
Her current work examines child welfare and immigrant
families in the United States.
Kathryn Edin is a Distinguished Bloomberg Professor
in the Department of Sociology, Zanvyl Krieger School
of Arts and Sciences and Department of Population,
Family, and Reproductive Health, Bloomberg School of
Public Health at Johns Hopkins University. She deploys
mixed-method approaches to research the domains of
welfare and low-wage work, family life, and neighbor-
hood contexts. She is the co-author of five books, her
most recent work being Doing the Best I Can: Father-
hood in the Inner City.
Sarah Halpern-Meekin is an Assistant Professor of
Human Development and Family Studies at the Univer-
sity of Wisconsin-Madison. She studies romantic relation-
ships and welfare policy using a mixed-methods approach.
Her current research includes examining how premarital
experiences are associated with later relationship out-
comes and how government-funded relationship educa-
tion programs are experienced by their participants.
at Egerton University. Library on August 26, 2015asr.sagepub.comDownloaded from
... Tax refunds are especially important for lower-income tax filers because they often represent the single largest payment they will receive all year (Morduch & Schneider, 2017;Roll et al., 2018) and thus are an important source of consumption support. Lower-income households use refunds for many purposes: to build savings and pay down debt (Despard et al., 2015;Grinstein-Weiss et al., 2015;Mendenhall et al., 2012;Sykes et al., 2015), getting caught up on overdue bills, making home or car repairs, and making large purchases (Mendenhall et al., 2012;Morduch & Schneider, 2017;Shaefer et al., 2013;Sykes et al., 2015;Tach & Greene, 2014). ...
... Tax refunds are especially important for lower-income tax filers because they often represent the single largest payment they will receive all year (Morduch & Schneider, 2017;Roll et al., 2018) and thus are an important source of consumption support. Lower-income households use refunds for many purposes: to build savings and pay down debt (Despard et al., 2015;Grinstein-Weiss et al., 2015;Mendenhall et al., 2012;Sykes et al., 2015), getting caught up on overdue bills, making home or car repairs, and making large purchases (Mendenhall et al., 2012;Morduch & Schneider, 2017;Shaefer et al., 2013;Sykes et al., 2015;Tach & Greene, 2014). ...
... Mendenhall et al. (2012) found that 46% of refunds were allocated for current consumption purposes (e.g., groceries, child expenses, car repair), 36% to get caught up on bills and reduce debt, and 19% for saving, education, and home purchase or improvement. In a related study, Sykes et al. (2015) found four themes from in-depth interviews that characterized recipients' perceptions of the EITC: relief, enhanced consumption, upward mobility, and social inclusion. While consumption was a key purpose of the credit, recipients also regarded the EITC as a reward for work, an opportunity to plan for the future, and a chance to meet wants as well as needs. ...
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The Earned Income Tax Credit (EITC) provides substantial financial support to lowincome workers in the USA, yet around a quarter of EITC payments are estimated to be erroneous or fraudulent. Beginning in 2017, the Protecting Americans from Tax Hikes Act of 2015 requires the Internal Revenue Service to spend additional time processing early EITC claims, delaying the issuance of tax refunds. Leveraging unique data, this paper investigates how delayed tax refunds affected the experience of hardship and unsecured debt among EITC recipients. Results indicate that early filers experienced increased food insecurity relative to later filers after the implementation of the refund delay.
... (Policymaker F) In sum, the agenda of expanding the welfare-wage gap via LIFA entailed two sets of opinions. Similar to findings of previous studies (Dean, 2012;Halpern-Meekin et al., 2015;Sykes et al., 2015), the first displayed antagonism towards unemployment benefits, which basically reflected the 'less eligibility' principle with a more humane appearance. The second challenged the righteousness of such an agenda but pragmatically supported LIFA to increase the income of the working poor. ...
... In this sense, IWBs disciplined the deserving poor via wage subsidies and working hours' conditionality without imposing welfare sanctions (Clegg, 2015). IWBs' positive appearance concealed their 'throffer' nature (Watts and Fitzpatrick, 2018), and the behavioural conditionality may undermine social citizenship by taking social right out of the entitlement to income protection (Dean, 2012;Sykes et al., 2015). ...
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Informed by moral economy theories, this article presents a qualitative study of the normative construction of and contestation over a new in-work benefit in Hong Kong, the Low-income Working Family Allowance (LIFA). Using a policy stakeholder approach to examining the public’s ideas and justifications of LIFA, the findings reveal the eligibility-defined entitlement shared by claimants, scepticism towards long working hours conditionality required by LIFA, complex understanding of deservingness and self-reliance, and dissatisfaction with the closing gap between welfare and wages. This article connects moral economy theories to the normative basis of a social security system, offering insights for capturing the dynamics of consensus and controversies about social welfare. It also extends the research on morality and social welfare from Western countries to an Asian context. The case of Hong Kong evidences how policy stakeholders make moral sense of a new welfare in the absence of social right language.
... In the light of IWBs' potential two-fold beneficiary, it is vital to integrate the views from both the demand-and supply-side. A few qualitative studies have focused on claimants' perceptions of IWBs (Dean, 2012;Sykes et al, 2015;Tach et al, 2019). When it comes to investigating the relationship between IWBs and employers, there are two reasons to include welfare claimants and policymakers to achieve a more holistic analysis. ...
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Based on an employer-focused political economy framework, this qualitative study investigates how employers are represented in and affected by the policymaking of in-work benefits (IWBs), given employers’ political status and labour market conditions. Respondents addressed the importance of employers’ tacit support of the wage subsidies funded by the government. Arguably, it was considered that IWBs did not have a direct impact on wages, but they subsidised employers as a constraint against the minimum wage, boosted the workforce’s availability, and reduced recruitment costs for employers. This research substantiates the understanding of IWBs by integrating the perspectives of policy stakeholders and expands IWBs’ case studies in an authoritarian context.
... Low-income earners are defined as individuals in work whose income falls below the poverty line and an average Ugandan survives on <$1 US per day (15). Economic pressure associated with the pandemic has not been explored in low resource settings, thus undermining the mental health status of most Africans. ...
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Background: Low-income earners are particularly vulnerable to mental health, consequence of the coronavirus disease 2019 (COVID-19) lockdown restrictions, due to a temporary or permanent loss of income and livelihood, coupled with government-enforced measures of social distancing. This study evaluates the mental health status among low-income earners in southwestern Uganda during the first total COVID-19 lockdown in Uganda. Methods: A cross-sectional descriptive study was undertaken amongst earners whose income falls below the poverty threshold. Two hundred and fifty-three ( n = 253) male and female low-income earners between the ages of 18 and 60 years of age were recruited to the study. Modified generalized anxiety disorder (GAD-7), Spielberger's State-Trait Anger Expression Inventory-2 (STAXI-2), and Beck Depression Inventory (BDI) tools as appropriate were used to assess anxiety, anger, and depression respectively among our respondents. Results: Severe anxiety (68.8%) followed by moderate depression (60.5%) and moderate anger (56.9%) were the most common mental health challenges experienced by low-income earners in Bushenyi district. Awareness of mental healthcare increased with the age of respondents in both males and females. A linear relationship was observed with age and depression ( r = 0.154, P = 0.014) while positive correlations were observed between anxiety and anger ( r = 0.254, P < 0.001); anxiety and depression ( r = 0.153, P = 0.015) and anger and depression ( r = 0.153, P = 0.015). Conclusion: The study shows the importance of mental health awareness in low resource settings during the current COVID-19 pandemic. Females were identified as persons at risk to mental depression, while anger was highest amongst young males.
... But that is not to say that the welfare state does not also influence the value and utility of socioeconomic resources and health-relevant resources via discrimination and devitalization. For example, use of American safety-net programs has been shown to intentionally and unintentionally exclude certain segments of the population (Edwards 2020;Floyd 2020;e.g., discrimination) and produce feelings of shame among recipients (Sherman 2013;Sykes et al. 2015;Whittle et al. 2020;e.g., devitalization). ...
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Link and Phelan’s pioneering 1995 theory of fundamental causes urged health scholars to consider the macro-level contexts that “put people at risk of risks.” Allied research on the political economy of health has since aptly demonstrated how institutions contextualize risk factors for health. Yet scant research has fully capitalized on either fundamental cause or political economy of health’s allusion to power relations as a determinant of persistent inequalities in population health. I address this oversight by advancing a theory of health power resources that contends that power relations distribute and translate the meaning (i.e., necessity, value, and utility) of socioeconomic and health-relevant resources. This occurs through stratification, commodification, discrimination, and devitalization. Resurrecting historical sociological emphases on power relations provides an avenue through which scholars can more fully understand the patterning of population health and better connect the sociology of health and illness to the central tenets of the discipline.
In recent decades, many affluent democracies moved from traditional welfare states to workfare systems. Meanwhile, income inequality developed differently across countries, even when they made apparently similar shifts from welfare to workfare. It is a matter of debate why welfare state change had such heterogeneous consequences across countries. This article proposes that different incentives to take up low-wage work set by tax reforms in the wake of welfare-to-workfare transitions alter consequences on inequality in the lower half of the income distribution. To support this argument, we contrast the trends between the U.S. and Germany. The German and U.S. tax systems were used in very different ways to incentivize low-wage work. The U.S. provided strong incentives to take up low-wage, high-hour work through refundable tax credits. They act as in-work subsidies and represent an enormous public income support program. In contrast, in Germany, payroll taxes were reduced for marginal employment. These jobs were intended to serve as a stepping stone to full employment. Germany aimed to reduce barriers to labor market entry, but did not increase subsidies for those working higher hours in low-wage jobs. We hypothesize that the German path led to increased income inequality within the lower half of the income distribution, whereas the large U.S. tax-based subsidies in the U.S. significantly counteracted it. Decompositions of unconditional quantile regressions based on the SOEP and the CPS-ASEC for 1992 and 2014 strongly support these assumptions. Households with no labor market integration lost ground with the workfare reforms in both countries, increasing inequality in the lower half. However, U.S. households that conformed to the new workfare system by taking low-wage jobs received additional after-tax income through tax cuts and credits. This additional income of the beneficiary households increased the percentile values between the 10th and 30th percentiles by about 6 per cent, thus reducing income inequality in the lower half. Germany, on the contrary, lacked such compensatory subsidies for compliant households. Thus, increased take-up of low-wage work was associated with an increase in income inequality in the lower half. We conclude that tax systems are important in understanding why the shift towards workfare was associated with heterogeneous trends in income inequality across countries.
The Earned Income Tax Credit (EITC) transferred more than $67 billion to taxpayers in 2016. We estimate changes in spending that occur following EITC disbursement. We make three key advances in identifying the effect: using estimated EITC dollar benefits to differentiate the impact of low from high benefits; estimating the impact by liquid assets; and, employing a triple‐difference model around the 1993 expansion and a separate triple‐difference model over the number of children. We find that the EITC acts as supplementary SNAP benefits for those with small EITC benefits, while those with larger benefits increase spending on durables, particularly automobiles.
This dissertation examines the politics of contemporary welfare provision in the United States through the lens of the social impact bond (SIB, also called “Pay for Success” (PFS)), a novel market-based policy tool that harnesses private dollars to fund local public programs. In a SIB agreement, the government borrows funds from private banks or philanthropies to pay for program implementation, and government borrowers repay the loan, with interest, only if the program achieves certain desired outcomes (e.g., a 10% reduction in recidivism). The SIB provides much-needed funding for resource-strapped governments, but it also infuses financial logics into processes of social service provision. SIBs ask local governments to meet the needs of vulnerable individuals, reduce social ills and save money on program costs as a result, and produce a program evaluation as evidence that said outcomes have been reached. In other words, SIBs ask governments not only to meet citizen needs but also to create capital in doing so, be it in terms of cost savings or knowledge gained. The rise of the SIB inspires three interrelated questions: What happens when financial logics organize activity within the social service sector? How do financial logics fare in processes of local service provision? And why do these logics fail to take hold fully in this space, even though they appear to find solid footing as organizing discourses in many other social domains? To answer these questions, I conducted a comparative case study of SIB projects in Cuyahoga County, Ohio; Massachusetts; and Washington, D.C. My data stems from 47 in-depth interviews with actors party to the SIB process, supplemented by public documents and records detailing the parameters of my three cases, the characteristics of other SIB projects, and the structure of the SIB field. The dissertation presents three broad findings. First, I argue that SIBs catalyzed the creativity and skill of local policymakers, who made adaptations to entrenched processes and responded nimbly to unexpected obstacles, first in applying the SIB model to their specific service provision contexts and later in pushing back against the financial logic of the SIB when it compromised their mandate to do no harm to the communities they served. Second, I demonstrate that the SIB movement is a rare case in which a specific financial logic moved into a space, failed to gain secure footing, and ultimately retreated. This occurred, I argue, because the range of hazards that arise in the implementation, measurement, and evaluation of social service interventions is exceedingly difficult to anticipate. Financial models hinge on successful risk management, and risk management is very hard in this setting. Third, I show that a rigid focus on social outcomes, like that which is built into the SIB model, masks meaningful differences in the work that goes into these projects: the politics of implementation, the variance in expertise and flexibility among actors within this space, and the difficulty of evaluating the efficacy of social interventions in a causally rigorous way. Taken together, these findings demonstrate that though the SIB failed as a financial tool, it succeeded as a political project. The movement’s trajectory demonstrates that novel tools of governance can spark creative problem solving among local political actors and disrupt institutionalized practices, setting into relief the power of political agents to embody, navigate, and recombine competing logics of action.
Despite our wealth, child poverty in the United States remains too high. The social safety net prevents and mitigates poverty for millions of children each year and evidence demonstrates long-term positive effects for recipients. But absent a commitment to universalism, our public investments in children produce uneven – and often inequitable – results. Our current system is heavily means-tested and work-conditioned. Though heavily targeted, it varies widely in adequacy and coverage by location and across population groups and it fails to serve all children in need. This article describes the evolution of the US social safety net for children over the last century. It traces the early 20th century origins of the contemporary system and the changes it saw through the mid-century's War on Poverty expansions and late 20th century's welfare reforms. Focusing specifically on federal cash and near-cash programs, it discusses key facets and principles of the current social safety net structure, its impact on children's health and economic well-being, remaining gaps, and promising advances for the future. Temporary improvements to the social safety net enacted as part of the pandemic response indicate important ways in which our public supports can reach more families, more consistently, moving forward. To reduce child poverty, one of the most promising approaches is to enact a national child allowance in the United States. Converting the existing Child Tax Credit into a universal child allowance, making it more generous, and delivering it to families on a regular basis throughout the year can accomplish this goal.
In 2015, the U.S. Treasury Department launched my RA, a no-fee retirement account designed for people who lacked employer-sponsored retirement options. We report findings from two behavioral field experiments intended to motivate interest in using the tax refund to open and fund my RAs directly through the tax-filing process. These experiments, administered to more than 100,000 low-income tax filers in 2016, embedded persuasive messages in emails sent to filers and directly within online tax-filing software. We find that interest in my RA was generally very low, although interest and enrollment intentions varied depending on the framing of the program's benefits.
This article builds upon classic economic perspectives of financial behavior by applying the narrative identity perspective of cultural sociology to explain how lower-income families respond to indebtedness. Drawing on in-depth qualitative interviews with 194 lower-income household heads, we show that debt management strategies are influenced by a desire to promote a financially responsible, self-sufficient social identity. Families are reluctant to ask for assistance when faced with economic hardship because it undermines this identity. Because the need to pay on debts is less acute than the need to pay for regular monthly expenses like rent or groceries, debts receive a lower priority in the monthly budget and families typically juggle their debts in private rather than turning to social networks for assistance. In some cases, however, debts take on special meanings and are handled differently. Respondents prioritize debts when they perceive payment as affirming a self-sufficient or upwardly mobile identity, but they reject and ignore debts they view as unfair or unjust. Because the private coping strategies families employ trap them in costly cycles of indebtedness and hinder future mobility prospects, debt management strategies are consequential for long-term financial well-being.
Introduction. Since the passage of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), millions of welfare recipients have left welfare and entered the workforce. For many the transition from welfare to work has not reduced economic hardship, partly because a significant proportion of the income gain from work is offset by the loss in cash benefits, as indicated in Chapter Two of this volume. Many struggle to make ends meet based on earnings from low-paid jobs. Even families whose incomes are modestly above the official poverty line often face significant material difficulties (Blank 2002, 2006; Grogger and Karoly 2005; Grogger, Karoly, and Klerman 2002; Lichter and Jayakody 2002). Our prior research on the effects of welfare reform on family expenditures suggests that families affected by the reforms have increased expenditures on work-related expenses such as transportation, adult clothing, and food away from home (Kaushal, Gao, and Waldfogel 2007). One very prominent element of welfare reform was the increased generosity of the Earned Income Tax Credit (EITC). In an effort to make work pay, the federal government dramatically increased non welfare support for low-income working families, in particular the EITC. Viewed by policymakers as an integral part of welfare reform, the EITC is widely considered—in the words of former New Jersey Senator Bill Bradley— “an effective, practical tool that provides working Americans the chance to climb the economic ladder to the middle class and build better opportunities for their families” (Bradley in “Proposes to Restore Funds for Earned Income Tax Credit” on October 24, 1995, as cited in Williams 1997; see also Ellwood 2000).
Even as they see their wages go down and their buying power decrease, many parents are still putting their kids' material desires first. These parents struggle with how to handle children's consumer wants, which continue unabated despite the economic downturn. And, indeed, parents and other adults continue to spend billions of dollars on children every year. Why do children seem to desire so much, so often, so soon, and why do parents capitulate so readily? To determine what forces lie behind the onslaught of Nintendo Wiis and Bratz dolls, Allison J. Pugh spent three years observing and interviewing children and their families. In Longing and Belonging: Parents, Children, and Consumer Culture, Pugh teases out the complex factors that contribute to how we buy, from lunchroom conversations about Game Boys to the stark inequalities facing American children. Pugh finds that children's desires stem less from striving for status or falling victim to advertising than from their yearning to join the conversation at school or in the neighborhood. Most parents respond to children's need to belong by buying the particular goods and experiences that act as passports in children's social worlds, because they sympathize with their children's fear of being different from their peers. Even under financial constraints, families prioritize children "feeling normal". Pugh masterfully illuminates the surprising similarities in the fears and hopes of parents and children from vastly different social contexts, showing that while corporate marketing and materialism play a part in the commodification of childhood, at the heart of the matter is the desire to belong.