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Local Cash Transfers and Household Debt: Evidence From Johnson County's Direct Assistance Program

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  • David Frisvold
  • Phuong Nguyen‐Hoang
  • Christopher K. Odinet

Abstract

Using administrative credit report data, we examine how recipients of an unconditional, unrestricted cash transfer program in Johnson County, Iowa used their one‐time $1400 payment for debt‐related purposes. Unlike previous studies of federal stimulus payments where recipients primarily used the funds to reduce existing debt, we find that DAP recipients took on additional housing and auto debt. Specifically, the assistance significantly increased total debt by $2060 (10% above mean), with the largest increases being in mortgage debt ($1129) and auto debt ($435). These effects appeared immediately after recipients cashed their checks and lasted for 9 months. This study provides insights into how unrestricted local cash transfers affect recipients' debt management decisions.

Suggested Citation

  • David Frisvold & Phuong Nguyen‐Hoang & Christopher K. Odinet, 2026. "Local Cash Transfers and Household Debt: Evidence From Johnson County's Direct Assistance Program," Journal of Consumer Affairs, Wiley Blackwell, vol. 60(3), September.
    • Handle: RePEc:bla:jconsa:v:60:y:2026:i:3:n:e70076
    DOI: 10.1111/joca.70076
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