The Earned Income Tax Credit and short-term changes in financial strain and drug use

Financial strain is common in the United States and associated with substance use. We examined whether eligibility for the federal Earned Income Tax Credit (EITC), the largest US anti-poverty program, affected financial strain and drug use.

Using a difference-in-difference design with data from the Population Assessment on Tobacco and Health Wave 1 Adult Survey, a nationally representative survey of US adults, we estimated short-term EITC-associated changes in past-month financial strain, cannabis use, and central nervous system (CNS) depressant use for EITC-eligible people during the EITC disbursement period. Interview timing during/outside the disbursement period was independent of individual characteristics.

Approximately 15.4% of adults were EITC-eligible with refunds ≥$500. Unadjusted prevalences of financial strain among EITC-eligible persons were 35.2% outside and 32.2% during the disbursement period. Refunds were associated with significantly lower financial strain (β = -4.5% [-8.9%, -0.1%]) vs EITC-ineligible individuals. Unadjusted prevalences of cannabis use in both periods were 10.7% and 9.8% in EITC-eligible vs 7.8% and 7.6% among EITC-ineligible; corresponding CNS depressant unadjusted prevalences were 6.3% and 6.6% in EITC-eligible and 4.9% and 4.7% among EITC-ineligible. There were no significant EITC-associated differences in drug use.

Findings support generous EITC refunds, with no evidence that financially supporting low-income people increased drug use.