Psychological well-being and child tax credit: Comparative assessment of payment approaches

Abstract

The expanded Child Tax Credit (CTC) has the potential to improve the mental well-being of families with dependent children. This study investigates the impact of CTC disbursement methods – monthly installments versus a single, equivalent lump-sum payment – on the mental health of low-income households, a particularly vulnerable population. Using data from the Household Pulse Survey and a triple difference analysis, we compare the correlation between these two disbursement strategies and four key mental health indicators: anxiety, worry, disinterest, and down feeling. Results demonstrate that lump-sum disbursements are associated with significantly greater improvements in mental health outcomes. While monthly payments may offer distinct, potentially longer-term benefits, our findings highlight the superior short-term mental health outcomes associated with lump-sum disbursements. These results point to the importance of disbursement strategy in the design and implementation of financial support programs aimed at improving family well-being.