“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
“Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
“There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“A full-throated defense of economic dynamism.” - The Wall Street Journal
“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
AI Summary.Fully closing Social Security's funding gap by raising the payroll tax rate would require an immediate, permanent increase from 12.4% to 17.6%, which would reduce labor supply and economic growth. Research on a prior benefit cut found affected Americans raised earnings by 61 cents per dollar of lost benefits, generating additional payroll tax revenue.
Andrew BiggsAmerican Enterprise Institute
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Biggs argues that “fair” approaches to restoring Social Security solvency – those that do not cut already accrued benefits – are less effective than “unfair” ones that do, because the latter incentivize increased work effort, raising growth and revenue.
Does closing Social Security's gap with higher payroll taxes hurt growth?
Core argument: Keeping Social Security permanently solvent under the "fairness" model of paying accrued benefits in full would require an immediate and permanent payroll tax increase from 12.4% to 17.6%, which would decrease labor supply and reduce economic growth.
Imagine that Social Security reform follows the fairness model, in which accrued benefits are paid in full but the rate at which future benefits are earned is reduced. A simple way to do this is to increase the payroll tax rate To keep Social Security permanently solvent, meaning through 75 years and beyond, would require an immediate and permanent increase in the payroll tax rate [from] 12.4% to 17.6%. The higher rate would decrease labor supply and reduce economic growth. [Consider] an alternate reform, which looks clearly unfair: fix Social Security’s funding gap entirely by reducing accrued benefits that Americans already have earned. As of 2025, Americans had accrued $54 trillion in Social Security benefits. Social Security’s unfunded obligation as of 2025 was $26 trillion. So, roughly, this means cutting Americans’ “earned benefits” in half. [Analyzing the 1977 reform that undid the notorious 1972 “double-indexing” of benefits, a group of economists], using SSA earnings data, found that, for every dollar of lost benefits, the affected Americans increased their earnings by 61 cents. Moreover, these additional earnings would be taxed by Social Security, further strengthening the program’s finances. In effect, this makes cutting benefits a “cheaper” way to fix Social Security than raising taxes, because people respond in ways that also increase tax revenues.
Takeaways by Macro Roundup® AI
Keeping Social Security permanently solvent under the "fairness" model of paying accrued benefits in full would require an immediate and permanent payroll tax increase from 12.4% to 17.6%, which would decrease labor supply and reduce economic growth.
Americans had accrued $54 trillion in Social Security benefits as of 2025 against an unfunded obligation of $26 trillion, so closing the gap solely by cutting already-earned benefits would mean roughly halving those benefits.
Economists analyzing the 1977 reform that undid the 1972 "double-indexing" of benefits found, using SSA earnings data, that affected Americans raised their earnings by 61 cents per dollar of lost benefits, earnings that Social Security would tax.
Related Articles:
Social Security and Trends in Wealth Inequality— The authors estimate that including Social Security in household wealth leaves top wealth shares little changed over three decades, with the top 10% and top 1% shares rising 1.1 and 1.6 percentage points versus roughly 9 and 6 points for marketable wealth alone. Social Security wealth grew from $7tn to $39tn.
How Federal Spending is Distributed by Age— An analysis classifying $4.4tn of $7tn in federal spending by age finds retirees aged 65 and older receive $2.7tn, 38.6% of total outlays and 61.9% of age-assignable spending, versus $1.2tn for working-age adults and $449bn for those under 26. Social Security and Medicare account for 80% of age-assignable spending on older adults.
The Great “Transfer”-mation— Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.
AI Summary.An analysis classifying $4.4tn of $7tn in federal spending by age finds retirees aged 65 and older receive $2.7tn, 38.6% of total outlays and 61.9% of age-assignable spending, versus $1.2tn for working-age adults and $449bn for those under 26. Social Security and Medicare account for 80% of age-assignable spending on older adults.
Kent SmettersUniversity of Pennsylvania
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In 2025, of the 62.5% of Federal spending that is age-assignable on a per-capita basis, US retirees aged 65+ were given $43,700, working-age adults 26–64 got $7,300, and children and young adults got $4,300.
How is federal spending distributed across age groups?
Core argument: Retirees aged 65 and older receive $2.7 trillion of federal spending in fiscal 2025, equal to 38.6% of total outlays and 61.9% of age-assignable spending, versus $1.2 trillion for working-age adults aged 26–64.
We trace spending items within 52 general spending categories, totalling $7T for the 2025 Fiscal Year. We are able to classify a total of $4.4T across three broad age categories and assign the remaining $2.6T to an all-ages residual. Retirees (adults age 65 and older) receive $2.7T, equal to 38.6% of total federal outlays and 61.9% of age-assignable spending. Working-age adults (ages 26-64) receive $1.2T (27.9% of age-assignable), and children and young adults (under age 26) receive $449B (10.3%). The dominance of the retiree category reflects two programs above all others: Social Security and Medicare. Social Security directs $1.3T to retirees, and Medicare sends $835B. Together, they account for 80% of all age-assignable spending on older adults. But the retiree total extends beyond these two entitlements. Federal employee retirement benefits ($169B), housing assistance for older households, Medicaid long-term-care spending, and VA medical care all contribute, making the federal budget more retiree-focused than a Social Security–only lens would suggest.
Takeaways by Macro Roundup® AI
Retirees aged 65 and older receive $2.7 trillion of federal spending in fiscal 2025, equal to 38.6% of total outlays and 61.9% of age-assignable spending, versus $1.2 trillion for working-age adults aged 26–64.
Children and young adults under age 26 receive $449 billion, or 10.3% of age-assignable federal spending, out of $4.4 trillion classified by age within a $7 trillion budget, with $2.6 trillion assigned to an all-ages residual.
Social Security directs $1.3 trillion and Medicare $835 billion to retirees, together 80% of age-assignable spending on older adults, with federal employee retirement benefits ($169 billion), housing assistance, Medicaid long-term care, and VA medical care contributing further.
Related Articles:
The Great “Transfer”-mation— Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.
France and Britain Are In Thrall To Pensioners— French pensioners receive larger government payments than in any other western country and begin receiving them several years earlier, leaving over-65s with higher average incomes than the working-age population — a situation without precedent internationally or in France's own history. Proposals to raise the retirement age or delay pension increases have triggered nationwide protests and government collapses.
The Budgetary Impact of the Abandonment of Federalism— Federal spending on activities originally regarded as state, local, or private-sector responsibilities is estimated to have risen from 2% of GDP in 1950 to 14% in 2019, exceeding the entire growth in federal spending over that period and reaching two-thirds of all federal outlays. Aid to individuals accounts for 80% of that increase, grants to states the remaining 20%.
AI Summary.The authors estimate that a slowdown in US health care spending reflects technology-associated changes in health and site of care (21% of the slowdown, double that in Medicare), more elastic long-run supply (6%), market changes reducing and making demand more elastic (11–27%), improved population health (7%), and slower price growth net of upcoding (24%).
David Cutler and Lev KlarnetBrookings Papers On Economic Activity
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In 2024, medical spending as a share of GDP was just above its 2010 level and 15% ($977B) below its 2010 forecast; 21% of the gap was due to technology, 24% to price reductions, and 11–27% to reforms such as prior authorization and higher deductibles.
What explains the slowdown in US health care spending?
Core argument: Technology-associated changes in health and site of care account for 21% of the overall U.S. health care cost slowdown and double that share in Medicare, according to the authors' estimates.
Five factors are important in the slowdown in spending [Figure 16]. The first is technology-associated changes in health and site of care. These correspond to the subsequent innovations in our model. Together, technologies along these lines account for 21% of the overall cost slowdown and double that in Medicare. Second, long-run supply is more elastic than short-run supply, which lowers spending over time. This is particularly apparent in the impact of patent expiration for pharmaceuticals and in relative declines in imaging reimbursement. We estimate that greater long-run supply explains 6% of the spending slowdown. Third, a variety of market changes contribute to reduced and more elastic demand, including increased cost sharing paid by consumers, physicians not paid as much for using technologies, and insurers imposing restrictions on technology use - a rough guess is that these account for 11 to 27% of the spending slowdown. Fourth, the population is healthier in ways that reduce spending. This includes fewer hospitalizations for smoking-related conditions and reduced need for formal home health care. The birth rate has fallen as well, which reduces the need for care. We estimate improved population health explains 7% of the spending slowdown. A major component is slower price growth. Net of upcoding, we estimate lower price growth explains 24% of the spending slowdown.
Takeaways by Macro Roundup® AI
Technology-associated changes in health and site of care account for 21% of the overall U.S. health care cost slowdown and double that share in Medicare, according to the authors' estimates.
The authors estimate that slower price growth, net of upcoding, explains 24% of the health care spending slowdown, while market changes reducing demand — higher consumer cost sharing, lower physician payment for technology use, and insurer restrictions — account for a rough 11–27%.
Improved population health explains an estimated 7% of the spending slowdown, through fewer smoking-related hospitalizations, reduced need for formal home health care, and a lower birth rate, while greater long-run supply elasticity explains 6%.
Related Articles:
Sick as a Dog— US healthcare stocks tracked technology-sector returns from 1989 to 2019 with lower volatility (15% vs 24%), but have since stagnated as technology advanced. Major pharmaceutical firms trade at forward price-to-earnings ratios of 8x–9x, biotech carries one of the market's largest valuation discounts, and 80% of biotech initial public offerings since 2018 have collapsed.
Saved by Medicaid: New Evidence on Health Insurance and Mortality from the Universe of Low-Income Adults— Using linked Census and tax records for 37m low-income adults, the authors estimate that state Medicaid expansions raised enrollment by 12 percentage points and cut mortality among low-income adults by 2.5%, implying a 21% reduction in the mortality hazard of new enrollees. They estimate direct budgetary costs of $5.4m per life saved and $179,000 per life-year saved.
The Great “Transfer”-mation— Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.
AI Summary.Studies of Quebec's shift to universal child care found increases in aggression, anxiety and hyperactivity among children and declines in motor and social skills, with large estimated effects. Researchers attribute the contrast with successful small randomized trials to slipping quality when a pilot is scaled up while holding down costs.
Economist StaffThe Economist
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Baker, et al found that a shift to universal child care led to a rise in aggression, anxiety and hyperactivity among Quebecer children. James Heckman, who found very high returns to a small, high quality pilot program, warns against low-cost imitations.
Does scaling up universal child care harm children's development?
Core argument: Two studies by Baker, Gruber, and Mulligan found that Quebec's shift to universal child care appeared to raise aggression, anxiety and hyperactivity among children and lower motor and social skills, with large effects.
Two studies by Baker, Gruber, and Mulligan found that shifting to universal child care appeared to lead to a rise in aggression, anxiety and hyperactivity among Quebecer children, as well as a fall in motor and social skills, [and] the effects were large. How can this be? There is, after all, lots of evidence—in the form of small, randomised controlled trials—in support of similar schemes. [e.g.] In 2010, James Heckman and co-authors calculated that, on conservative assumptions, the investment made in the children [in the famous Perry study] returned 7-10% a year to society—comparable to the historical rate of return on equity. Quebec had tried, while keeping costs down, to imitate a small pilot on a grand scale. Standards inevitably slipped. When Heckman was asked by the NYT about the province’s experience, he noted how different it was from the trials he had studied. “These were warehouses,” he said. “They were fairly impersonal, there wasn’t any real quality. Quality has to be a sine qua non of the whole enterprise.”
Takeaways by Macro Roundup® AI
Two studies by Baker, Gruber, and Mulligan found that Quebec's shift to universal child care appeared to raise aggression, anxiety and hyperactivity among children and lower motor and social skills, with large effects.
James Heckman and co-authors calculated in 2010 that, on conservative assumptions, the investment in children in the Perry study returned 7–10% a year to society, comparable to the historical rate of return on equity.
Heckman told the New York Times that Quebec's child-care settings were "warehouses" that were fairly impersonal and lacked real quality, unlike the trials he had studied, and argued that quality has to be a sine qua non.
Related Articles:
The Long-Run Impacts of a Universal Child Care Program— A universal childcare program in Quebec raised childcare use by over 40% of the baseline rate but is associated with lasting declines in noncognitive outcomes such as anxiety and aggression, persisting into the school years. The authors estimate boys saw the largest deterioration, with criminal accusations up 19% and convictions up 22%, while cognitive test score effects were mixed.
Universal Childcare, Maternal Labor Supply and Family Well-Being— The authors find Quebec's universal childcare raised the share of children aged 0-4 in care by 14 percentage points relative to the rest of Canada and married women's labor force participation by 7.7 percentage points. Tax revenue from added maternal work fell short of subsidy costs, and child and parental outcomes worsened.
Birth Rates Are Falling In The Nordics. Are Family-Friendly Policies No Longer Enough?— Falling Nordic birth rates are now driven by childlessness rather than smaller families, with roughly three-quarters of Finland's recent fertility decline attributable to people who have no children. Nearly 40% of Finnish men with low education are childless at 45, and most have no partners.
AI Summary.Using linked Census and tax records for 37m low-income adults, the authors estimate that state Medicaid expansions raised enrollment by 12 percentage points and cut mortality among low-income adults by 2.5%, implying a 21% reduction in the mortality hazard of new enrollees. They estimate direct budgetary costs of $5.4m per life saved and $179,000 per life-year saved.
Angela Wyse and Bruce MeyerNational Bureau of Economic Research
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Exploiting state-level variation in the timing and adoption of Medicaid expansions, Wyse and Meyer infer that the mortality hazard of new enrollees (the “treated”) fell by an average of 21%. Younger adults accounted for almost 1/2 of life-years saved.
Does expanding public health insurance reduce mortality among low-income adults?
Core argument: Medicaid expansions raised enrollment by 12 percentage points and reduced mortality of the low-income adult population by 2.5%, which the authors estimate implies a 21% reduction in the mortality hazard of new enrollees.
We examine the causal effect of health insurance on mortality using the universe of low-income adults, a dataset of 37 million individuals identified by linking the 2010 Census to administrative tax data. Our methodology leverages state-level variation in the timing and adoption of Medicaid expansions under the Affordable Care Act (ACA) and earlier waivers. We find that expansions increased Medicaid enrollment by 12 percentage points and reduced the mortality of the low-income adult population by 2.5%, suggesting a 21% reduction in the mortality hazard of new enrollees. Mortality reductions accrued not only to older age cohorts, but also to younger adults, who accounted for nearly half of life-years saved due to their longer remaining lifespans and large share of the low-income adult population. These expansions appear to be cost-effective, with direct budgetary costs of $5.4 million per life saved and $179,000 per life-year saved falling well below valuations commonly found in the literature. Our findings suggest that lack of health insurance explains about five to twenty percent of the mortality disparity between high- and low-income Americans.
Takeaways by Macro Roundup® AI
Medicaid expansions raised enrollment by 12 percentage points and reduced mortality of the low-income adult population by 2.5%, which the authors estimate implies a 21% reduction in the mortality hazard of new enrollees.
Mortality reductions accrued to younger adults as well as older cohorts, with younger adults accounting for nearly half of life-years saved given their longer remaining lifespans and large share of the low-income adult population.
Direct budgetary costs of the expansions came to $5.4 million per life saved and $179,000 per life-year saved, below valuations commonly found in the literature, and the authors suggest lack of insurance explains about 5 to 20% of the mortality disparity between high- and low-income Americans.
Related Articles:
Here’s How Government Spending Has Grown—and Where the Money Is Going— US federal spending rose to nearly $6.8tn in fiscal year 2024 from about $3.7tn in 2015, with revenue rising far more slowly. Adjusting for inflation and population growth shows spending still climbed, but by less than the raw dollar figures suggest.
Medicaid May Face Big Cuts and Work Requirements— Medicaid enrollment reached 87m people, boosted by pandemic legislation requiring states to keep people enrolled longer than normal and by additional states adopting the Affordable Care Act expansion, under which the federal government covers 90% of costs for expansion enrollees. The Congressional Budget Office projected states would receive nearly $60bn less in federal Medicaid funds year over year.
The Great “Transfer”-mation— Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.
AI Summary.Between 1989–90 and 2019–20, the published sticker price of college rose $13,717 in real terms while net tuition paid by students after aid rose $4,526; net tuition received by institutions rose $8,128. The authors argue colleges captured increases in external aid such as Pell Grants rather than passing them to students.
Preston CooperAmerican Enterprise Institute
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Between 1990 and 2020, colleges raised tuitions and “captured increases in external financial aid, such as Pell Grants, instead of passing those increases through to students.” @PrestonCooper93
Do colleges capture financial aid increases instead of passing them along?
Core argument: The college sticker price rose $13,717 in real terms between 1989–90 and 2019–20, while net tuition paid by students after financial aid rose $4,526.
Taxpayers have dramatically increased financial aid spending. Unfortunately, colleges raised their prices even more, so the net tuition students pay still went up. Had colleges maintained tuition at 1989–90 levels, the increased generosity of financial aid from governments and other external actors would have delivered free tuition for the average public college student. The sticker price of college rose $13,717 in real terms between 1989–90 and 2019–20, the net tuition students pay after financial aid rose just $4,526. However, the net tuition received by institutions rose by a greater amount ($8,128). This is because institutions captured increases in external financial aid, such as Pell Grants, instead of passing those increases through to students. The NPSAS data series ends in 2019–20. However, higher education has seen remarkable developments since then. College enrollment dropped in the wake of the pandemic, which brought about reductions in real sticker prices.
Takeaways by Macro Roundup® AI
The college sticker price rose $13,717 in real terms between 1989–90 and 2019–20, while net tuition paid by students after financial aid rose $4,526.
Net tuition received by institutions rose $8,128 between 1989–90 and 2019–20, more than the increase students paid, because institutions captured increases in external aid such as Pell Grants instead of passing them through.
Had colleges held tuition at 1989–90 levels, the increased generosity of financial aid from governments and other external actors would have delivered free tuition for the average public college student.
Related Articles:
PLUS or Minus? The Effect of Graduate School Loans on Access, Attainment, and Prices— The authors estimate that uncapping federal graduate student borrowing increased previously constrained students' borrowing and shifted their debt from private to federal sources, but had no effect on graduate enrollment, the racial and gender composition of entering students, human capital accumulation, or later earnings. They find the resulting increase in federal loans significantly raised program prices.
What Went Wrong with Federal Student Loans?— Weakened regulations on institutions enrolling aid-dependent students led to rising enrollment of disadvantaged students, but primarily at low-value institutions where loan performance deteriorated. Institutions in the lowest loan-repayment quintile had a 23% completion rate, $27,760 average post-enrollment earnings, and 20% default rates, versus 73%, $48,375, and 3% at the highest.
The Total Cost of Student Debt Cancellation— Recent US student debt cancellation policies are estimated to cost a combined $870bn to $1.4tn, with $620bn already implemented through an income-driven repayment program, interest cancellation during repayment pauses, and targeted discharges. The newest cancellation plan is preliminarily estimated to cost an additional $250bn to $750bn.
AI Summary.The authors estimate that a hypothetical low-income family with children receives $68,686 in government support at an income of $11,000 but only $22,709 at $65,000, while its tax liability rises from $842 to $12,835. The lost assistance plus higher taxes fully offsets the $54,000 income gain.
Elias Ilin and Alvaro SanchezFederal Reserve Bank of Atlanta
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A single parent with one child in Washington DC, earning $11K, receives $68K of government benefits net of taxes for a total after-tax income of $79K. A counterpart, earning $65K, receives $10K of government benefits net of taxes for an after-tax income of $75K. This structure creates little, if any, financial incentive for a low-income parent to work.
Do lost benefits and higher taxes erase income gains for low-income families?
Core argument: The authors estimate that a hypothetical family earning $11,000 is eligible for $68,686 in government support, falling to roughly a third of that ($22,709) at an income of $65,000.
The structure of the United States social safety net features the phaseout of public assistance as household income increases, which functions as an effective marginal tax on wage gains and is commonly referred to as a “benefits cliff.” This presents a disincentive for some low-income workers, especially those with children, to accept higher-paying jobs or promotions. Workforce development programs focused on helping low-income workers must contend with the challenges that benefits cliffs present to the career advancement of their clients. Overall, we estimate that at an income of $11,000, our hypothetical family is eligible for $68,686 in government support. At an income of $65,000, the family can expect to receive roughly a third of that assistance ($22,709). The family’s overall tax liability also increases, growing from $842 to $12,835. This loss of public assistance combined with an increase in taxes fully offsets a $54,000 income gain.
Takeaways by Macro Roundup® AI
The authors estimate that a hypothetical family earning $11,000 is eligible for $68,686 in government support, falling to roughly a third of that ($22,709) at an income of $65,000.
The same family's tax liability rises from $842 to $12,835 as income grows from $11,000 to $65,000, and the combined loss of public assistance and higher taxes fully offsets the $54,000 income gain.
The phaseout of public assistance as household income rises functions as an effective marginal tax on wage gains, presenting a disincentive for some low-income workers, especially those with children, to accept higher-paying jobs or promotions.
Related Articles:
“Compensate the Losers?” Economic Policy and Partisan Realignment in the US— The authors argue that partisan realignment by education reflects Democrats' declining supply of "predistribution" policies such as job guarantees, higher minimum wages, protectionism, and stronger unions, which less-educated Americans favor while more-educated Americans prefer taxes and transfers. They estimate changing views of the parties' economic policies explain roughly half the shift.
Welfare Is What’s Eating the Budget— The U.S. redistributes 29.4% of its gross domestic product through transfers and taxes, a larger share than any developed country except France at 30.1%. Counting transfers as income and taxes as income lost and adjusting for household size, average households in the bottom, second, and middle income fifths have roughly equal incomes despite large differences in work effort.
Calomiris on Gramm Ekelund and Early on Income Distribution— Transfer benefits phase out so quickly that the effective marginal tax rate in the lowest three income quintiles approaches 100%, meaning an extra dollar earned can cost roughly a dollar of benefits. Hours worked in the lower quintiles have plummeted, though the authors stop short of asserting a causal link.
AI Summary.Research from the Economic Innovation Group finds that in 1970, fewer than 1% of US counties drew at least 25% of personal income from government safety-net and social programs, compared with 53% of counties by 2022, a shift the group associates with population aging.
Aaron Zitner, Jon Kamp, and Brian McGillWall Street Journal
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In the 2000 presidential election, of the 317 counties that received transfers equal to at least 25% of total personal income, 59% voted for the GOP candidate. In 2020, 88% of 1,986 counties voted GOP.
Are more US counties relying on government aid for income?
Core argument: Research by the bipartisan Economic Innovation Group finds that 53% of U.S. counties drew at least a quarter of personal income from government safety-net and social programs in 2022, up from fewer than 1% in 1970.
The country hasn’t always been this reliant on government support. In 1970, government safety-net money accounted for significant income in fewer than 1% of America's counties, new research by the bipartisan think tank Economic Innovation Group finds. As America’s population aged, more counties came to count on this government backing for a significant share of their total income. That is defined by EIG, the think tank, as those in which government safety-net and social programs account for 25% or more of personal income in the county. By 2022, 53%—more than half of all U.S counties—drew at least a quarter of their income from government aid.
Takeaways by Macro Roundup® AI
Research by the bipartisan Economic Innovation Group finds that 53% of U.S. counties drew at least a quarter of personal income from government safety-net and social programs in 2022, up from fewer than 1% in 1970.
The Economic Innovation Group defines a county as reliant when government safety-net and social programs account for 25% or more of its personal income.
The Economic Innovation Group attributes the rising number of aid-reliant counties to the aging of America's population.
Related Articles:
The Great “Transfer”-mation— Government transfers rose from 8.2% of Americans' total personal income in 1970 to 17.6% in 2022, making them the third largest income source after work and investments. The share of U.S. counties drawing a quarter or more of personal income from transfers rose from under 1% in 1970 to 53% in 2022.
America Is Uniquely Ill-Suited To Handle a Falling Population— U.S. population growth slowed to about 7.4% in the decade to 2020, the slowest since the Great Depression, as the fertility rate fell from above the 2.1 needed for a stable population to 1.67. Because local and regional authorities levy 48% of all U.S. taxes—versus 20% in France and 6% in Britain—shrinking local revenue forces service cuts or tax rises.
