A New York City program designed to break intergenerational poverty by giving low income individuals cash incentives for maintaining good habits will come to an end after producing only modest results.
The pilot program, Opportunity New York City Family Rewards, was initiated by Mayor Michael Bloomberg three years ago with private financing to spearhead a bold and controversial effort to eradicate poverty. Traditional welfare programs gave cash to the poor, but in a slight shift, the money is contingent on the idea that individuals adopt activities that will improve their living conditions. Funds were doled out to households in exchange for keeping good habits and self reliance for such things as keeping a job, opening a bank account, and increasing children’s attendance and performance in schools.
But last week, an analysis of the program found it only reduced poverty for participants in the short term. There were only small improvements in changing behavior patterns to the benefit of improving health, education and employment prospects. As a result, the project will end as scheduled in August and will not go forward with a public financing.
The methods, dubbed in the social science world as “conditional cash transfer,” is essentially an initiative designed to mold the behavioral habits of the poor. The large scale experiment was the first of its kind in the United States and modeled after successful anti-poverty programs in Latin American countries. Here in the U.S., the program has sparked discussion once again about whether the root causes of poverty are behavioral or structural.
Bloomberg’s program was inspired by a Oportunidades, a program in Mexico built on the premise that cash incentives can alleviate immediate poverty while building behavior for people to improve their socioeconomic condition in the long-term.
Since Opportunity New York City began in 2007, the program has distributed $14 million to 2,400 families with an average of $3,000 going to each household. At least 80 percent of the participants were single-parent households. Forty-seven percent were Hispanic and 51 percent black. Almost half of the participants do not have education beyond high school. Each household could earn $20-600 through 22 incentive programs.
But last week’s findings by MDRC, a social policy group that assisted in the program’s implementation, found that when compared to a control group, only 1 percent more had health insurance and 2=0 percent more had bank accounts. Individuals were not able to maintain jobs and the rewards did not impact school performance for elementary and middle school students.
The report also said bureaucracy, tedious paper filings and deadlines also kept some participants from fully taking advantage of the program.
But aside from the implementation, the policy itself was also a concern. Conservatives have called it “the new paternalism” that “enforces lifestyle and civic responsibilities.” They are weary of a program that rewards behavior.
Meanwhile, Bloomberg is lauded for addressing urban inequality among anti-poverty advocates, but his emphasis on the free market has furrowed some eyebrows. Mark Winston Griffith, a fellow at the Drum Policy Institute=, is critical of the policy for dwindling structural problems down to individual behavior. He told The American Prospect:
“It sort of suggests that poverty is a lifestyle choice, that somehow if we’re just given a nudge, that we can choose not to be in this condition, or choose for our children to do better in school, or choose as parents to provide better child care. It comes out of the idea that poor people are almost sort of culturally and inherently dysfunctional. Not because of structural circumstances but because of their own personal failings.”
As The American Prospect points out, simply offering financial incentives in concentrated areas is a palliative solution. It doesn’t address institutional problems. The participants - many of whom are single parents - aren’t able to have access to child care; their children attend schools with inadequate resources, perhaps a reason why young schoolchildren in the program didn’t make any significant performance or attendance achievements. An isolated safety net isn’t enough.
The program has had success outside of the U.S. With an emphasis on the extremely poor, Mexico’s Oportunidades program has expanded from rural areas into the city. In Brazil, similar conditional cash transfer programs have helped 19 million people out of poverty. What could account for the success abroad and the failure in the United States? The MDRC report implies the program’s scope was too large:
Key among the design differences is the fact that other countries’ programs do not generally include rewards for educational achievement or workforce activities. Their incentives schedules are much simpler and not nearly as comprehensive, and the programs are not time-limited. Furthermore, CCT programs in some other countries function as the country’s core safety-net system, or as a critical part of it, not as an “add-on” program like Family Rewards.
The conditional cash transfer program continues to gain popularity around the world. But instead of trying to engineer behavior, another solution would be to funnel resources towards community development. Affordable housing, an adequate wage and decent schools are institutional problems that the less fortunate generally have no control over. Giving the poor the agency and democratic control to shape their own lives and neighborhoods can help to tackle the complex issues surrounding urban poverty.