Cutting family benefits makes people feel poorer for two years, regardless of inflation

The expanded 2021 Child Tax Credit ended, cutting income for millions of families. Losing $1,000 in benefits made people feel 2.4% worse about the economy, and that feeling lasted for two years.

Governments often assume people react only to the money they have right now. This paper shows that taking away a benefit makes people feel poorer for years, even if their income recovers or other economic factors improve. That feeling can change how people spend money or vote.