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Disappointing Findings on Anti-Poverty Cash Transfers in the USA

101 points| gwern | 8 years ago |straighttalkonevidence.org

143 comments

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[+] jf|8 years ago|reply
A Conditional Cash Transfer program called "Opportunity NYC" is mentioned in this article. Given what I read in the article, I expected the amount of money in question to be on the order of hundreds or thousands a month, but according to Wikipedia, the only gave parents "$40 to $100 a month"

    The cash payments go to the family, almost 
    always the mother or other female head of 
    the household. Parents can receive from 
    $40 to $100 a month if they keep up with 
    responsibilities such as taking their children 
    to the doctor or keeping them in school.
https://en.wikipedia.org/wiki/Opportunity_NYC
[+] wutbrodo|8 years ago|reply
Opportunity NYC was the previous program. The current one is called Family Rewards 2.0

> On average, the program cost $13,459 per family, 48 percent of which was paid directly to families as cash rewards.

This was over a three year period, which means that each family received 13459*.48/3 = $2150, or about $180/mo. So they provided between 2-5x as much money. I share your confusion though, as this is still categorically a lot smaller than I would've expected.

I guess it's less of a UBI type program and focuses more on cash rewards for good health and educational outcomes. For a low income family, $2k/yr is non-trivial.

[+] jmull|8 years ago|reply
I think this is OK. As a test.

A larger amount makes more sense in terms of being surer to have an impact. But it would make a widespread program based on those amounts so expensive that there’s probably no point in answering the question. Suppose it was found that giving poor families $20K annually did make a substantial difference? It probably wouldn’t matter because a large scale program based on that amount would probably never get funded.

Here, the question is if we give poor families a small (but not insignificant) amount of cash could that make a diffeeence? I guess the idea is that it might provide just enough to enable at least some of them to do something they would really like to do anyway but can’t quite manage.

Unfortunately, at least according to this, the answer is no. Perhaps we can think of it as a promising idea that didn’t pan out?

IDK, it sure would be nice if we could find a relatively cheap and straightforward solution to wide-spread poverty and inequality. Not exactly surprising that we haven’t, but it still seems worth continuing to try.

[+] DanBC|8 years ago|reply
It's not much money.

But for poor people $100 a month is the difference between eating or not eating some days, or having the heating on or going cold, or buying some books for the kids to read at home, or paying the bills on time vs paying them late.

Also, about books: I don't know if there's something like this in the US, but it seems like a good idea: https://literacytrust.org.uk/support-us/help-child-fall-love...

[+] aantix|8 years ago|reply
I found that striking too. In this program they were provided "$13,459 per family, 48 percent of which was paid directly to families as cash rewards".

While I'm sure it was nice to receive a _little_ extra money, that certainly isn't going to be life changing. It's more of a tease than anything.

[+] olympus|8 years ago|reply
I suspect that the benefits of conditional cash are very non-linear, such that the benefits aren't seen until the amount of monthly cash outweighs the immediate opportunity cost of meeting the conditions. If you're offering to pay me $200 per month, but I have to keep my kid in school (meaning a big time commitment from the kid and parent), and we have to go to regular doctor's appointments, then I'm losing several hours during a typical workday over the course of a year. If I take time off to take my kids to the doctor and also get myself to the doctor, then my boss is going to get irritated. I might lose my job. If I have to go to a work education program in the evening, then I don't have time for a second job. So now you're making me choose between $200 per month and possibly losing my job and preventing me from having two jobs. That's not worth it. You know what is worth it? $3k per month. That makes it worth the risk and effort.

But sadly, nobody has tried a real big money CCT program, because the good "small money" programs haven't been proven to work so nobody is willing to take the risk. But the problem is, you won't see any benefit until you get over the hump of the opportunity cost that people in poverty have.

[+] btilly|8 years ago|reply
I think that the problem is simple. People respond poorly to long-term rewards. You need to set up a short-term reward payoff cycle.

https://buildingpharmabrands.com/2013/05/27/the-ad-that-crea... is inspiring that way. It shows how people who could not be motivated to solve a well-known long-term problem, tooth decay, were successfully motivated to solve a short-term problem that they previously ignored - the fact that you wake up with film over your mouth that doesn't feel very good.

Long-term problems without good short-term feedback loops rewarding the proper behavior are hard, and will probably always be hard for humans. So rather than increasing the reward for the long-term issue, we need to find good short-term reinforcements for good behavior.

(Yeah, easier said than done...)

[+] rmuesi|8 years ago|reply
Isn't that exactly how this program was operating? Short-term reward payoff: monthly cash; long-term reward: children graduate from school.
[+] valar_m|8 years ago|reply
>I think that the problem is simple.

No. Poverty is an extraordinarily complex problem. Its root cause isn't even fully agreed upon by those who have studied it. The example in your link is not even remotely comparable or analogous.

[+] classics2|8 years ago|reply
The actual problem here is giving someone $180/mo in one of the most expensive cities in the country is worthless. It failed to change anything simply because $180 isn’t ever going to change anything for someone who’s improverished and living in city where basic rent is 10x that amount.
[+] SrslyJosh|8 years ago|reply
> The study found that the program did not produce the hoped-for effects on most key outcomes (g., child education, parental employment) during a two to four-year period.

Measuring educational outcomes is a good idea...

> a conditional cash transfer program for low-income families with at least one child entering ninth or 10th grade.

...but you are measuring the impact kids who likely have already spent over a decade in poverty?!? Why not measure younger children? Infancy and early childhood are the most critical developmental periods.

> Over about a three-year period, the program provided each participating family with cash rewards that were contingent on meeting certain goals related to children’s school performance, the family’s use of preventive health care, and parents’ employment.

So if you're not doing well enough, you don't get the money, which of course will help you meet the targets for the next month.... :-/

As others have said, the amount of assistance seems shockingly low for 1) the outcomes they seem to be looking for and 2) the massive dysfunction of American society.

[+] wutbrodo|8 years ago|reply
> As others have said, the amount of assistance seems shockingly low for 1) the outcomes they seem to be looking for and 2) the massive dysfunction of American society.

I think people are misunderstanding what they're actually trying to test here. CCTs aren't simply assistance, or UBI by another name. The intent of the study was to test the effect on incentives. The FPL for a family of 4 is 24600, or 2500/mo. An extra 10+% in disposable income at that level of poverty isn't a transformative amount of aid, but it's plausibly significant enough to shift incentives (and perhaps ability to meet the bar), which is the point of the study. As it turns out, it _doesn't_ appear to do that, but that more likely indicates structural problems with the hypothesis than the fact that the study should've started with higher amounts of aid.

[+] sharemywin|8 years ago|reply
On average, the program cost $13,459 per family, 48 percent of which was paid directly to families as cash rewards.

So the best we can do is 48% efficiency?

[+] olympus|8 years ago|reply
While it sounds low, this is almost the same efficiency that a temporary work program for homeless people in Denver had (which initially caused me to look into the low sounding efficiency number).

Think of it like this: if all of the remaining 52% went to paying a NYC social worker's average salary of $73.9k (source below), then each social worker has to manage 10.5 families to pay their salary. That's managing ten families and making sure their kids are in school, they are going to doctor's visits, etc, each week. That sounds like a manageable workload. BUT WAIT! An employee actually costs 200% of their salary to employ in terms of office rent, benefits, and other incidentals (that 200% figure can go up and down depending on company, location, etc, but is a good enough number for this thought experiment). So in reality, each social worker needs to manage 21 families to have their employment costs paid for. And tracking 21 families weekly sounds like a reasonable full time fob to me. That's getting in touch with just a little over four families each day to make sure they are meeting their conditions for the money. Since social work like this usually requires a lot of driving, it will probably fill up their day.

So really, when accounting for the fact that you have to pay the case managers a fair wage to live in NYC to administer the program, 48% sounds about right. At least that single number doesn't point to there being any obvious graft going on.

https://www1.salary.com/NY/Social-Worker-MSW-Salary.html

[+] cuckcuckspruce|8 years ago|reply
Just because only 48% was paid directly to the family does not mean that these were the only costs to the program. For example, the program requires regular health checkups, so to make those accessible it likely either paid the total cost or most of the cost for those checkups as it's unlikely that the people using this program would be able to pay for them completely on their own.
[+] JackFr|8 years ago|reply
To me that was the most interesting part.

With respect to the politics of implementing these programs, it's not simply the incentives created by the 48% that lead to a programs continued adoption, but the incentive created by the 52%.

[+] thephyber|8 years ago|reply
Are you assuming that the remaining 52% is all admin overhead? Why not assume it's partially paid out in non-cash rewards?
[+] alexbeloi|8 years ago|reply
If you are an employee, your cost to your employer is likely to be close to 2x your salary.
[+] setgree|8 years ago|reply
The comments on this thread drive home why pre-analysis plans[0] are awesome. It's easy to say, after the fact: 'the grants weren't large enough, the relationship between X and Y is conceptually non-linear, those aren't the right outcomes to look at,' etc. The point is whether folks would have offered these explanations in advance.

[0] 'Promises and perils of pre-analysis plans', Ben Olken, https://economics.mit.edu/files/10654

[+] ballenf|8 years ago|reply
Seems kind of intuitive that this type of program works well in countries with weaker social safety nets than countries with stronger ones. The risk-reward calculus is just very different. Not to mention that the $ amounts don't seem to have been adequately scaled to match cost of goods.
[+] ams6110|8 years ago|reply
Why are these findings disappointing? That suggests a presupposition of the outcome. The results are what they are. We learned this doesn't have the desired result, so try something else.
[+] Leader2light|8 years ago|reply
The goal of all welfare should be temporary support.

At the end of the day, its just other people paying for someone else to get free stuff.

[+] cortesoft|8 years ago|reply
Man, this type of program sounds patronizing. "Here, let us rich people tell you poor people what you need to do so you can be successful like me"

Making this conditional is basically saying, "You don't know what you need, and we can't trust you to do what is best for yourself"

People know what they need. If we have money to give them, just give them the money.

[+] bdcravens|8 years ago|reply
I grew up dirt poor. Filthy home, no family car, head lice, "food or electricity this week?" poor.

Poverty was a series of choices, not something forced upon my family. Of course you eventually get to a point where you can't "better choice" your way out of it, but I think the truth needs to be said, as that reality isn't very PC it seems.

Every time my family had any money, they bought stuff. Not stuff we needed, but stupid crap. Definitely not calculated decisions to make progress to getting out of poverty.

As a technology professional, I make good money, and my income has about quadrupled since I started in 1999. I still struggle with that same poor mentality even so.

At best, it's a spray-and-pray approach. Many will fail. Maybe the few that use the money to improve will make it all worth, kind of like the "Just Say No" campaign. The real question is what level of efficiency do we demand?

[+] torstenvl|8 years ago|reply
A very large number of people absolutely do not know what they need, or - if they do - are not sufficiently motivated to pursue those needs. See, e.g., the obesity epidemic, smoking cessation, social security (in lieu of retirement savings), tax refunds (in lieu of adjusting withholding), etc.

Willpower, knowledge, and just plain old wherewithal aren't free and can't just be assumed.

[+] chatmasta|8 years ago|reply
I think the insulting part is the subtle insinuation that the money is more likely to be used to buy drugs/alcohol than for the purpose of feeding the recipient or otherwise helping them out of poverty.

Even if 50% of recipients go buy drugs with the money, does it really matter? It probably costs more to enforce these conditions than the percent of funding that would go to drugs. It also creates bureaucratic overhead at the point of distribution.

Further, it’s unlikely enforcing criteria even filters out more drug users than non-restricted payouts do. These criteria are unlikey to be mutually exclusive with drug use. Someone can take drugs and also check all the boxes to meet the “criteria.” Given this consideration, it is clear that attaching conditions to a payout contributes little to no marginal gain in savings or efficency of individual outcomes.

But as other comments note, the conditions themselves are beneficial to both the recipient and those around them. If one person gets preventive healthcare who would not have otherwise, isn’t that a good outcome? Is it a better outcome than if one drug user does not seek or get access to disbursements?

Perhaps a better solution would create tiered payouts that get higher the more conditions you meet. The lowest payout would have no strings attached, but higher payouts would be available to those who fulfill certain criteria.

[+] ggchappell|8 years ago|reply
> People know what they need.

There is another way to view this. We might think of these programs as encouraging people to do things that society needs, instead of what they need. Then the payment is there to offset the personal cost.

Note. I've thought about this for all of 10 seconds. I might be 'way off.

[+] linkmotif|8 years ago|reply
Huh? Let me get this straight: you expect people to accept patronage. But you then don’t want the patrons to be patronizing? How does that work?

Generally speaking, aren’t poor people poor because either they don’t know how to be not poor or can’t execute being not poor? Yes, sometimes it’s impossible to execute being rich, like if there is a systematic bias against a certain cohort. But cases like that aside, isn’t it pretty obvious that poor people either cannot or do not know how to not be poor?

Your perspective seems to suggest being poor just happens randomly to random people. But that’s not true. Being poor happens to people who fail to get and keep money from other people. Any time someone talks about patronizing poor people it’s like: yeah either we’re not going to talk about them being poor like that’s a bad thing, or we’re going to talk about it like it’s a bad thing and so maybe then we should figure out what they’re doing wrong when there are other people who are not poor.

Pretending like everyone’s economic actions are equal is insensitive to people who get and keep money and patronizing to people who don’t. Not all economic actions are equally good. Setting money on fire is not a good economic action. It is offensive to the person whose labor created that value. Yet I see poor people doing all kinds of offensive economic actions with money given to them by the state. I see people using benefits cards to buy groceries that I would never buy because they are so expensive or unnecessary. If you don’t want to be judged, don’t take money from other people, because that is literally patronage, which is patronizing.

[+] jdoliner|8 years ago|reply
> Man, this type of program sounds patronizing. This program is in a very literal sense patronizing. One of the definitions of that word is providing financial assistance to someone. Another one is treating someone with an air of superiority, which is the connotation I think you meant. These two things tend to go hand in hand though, that's why they use the same word. I have trouble seeing how we could have a UBI like system that wasn't patronizing though.
[+] funkythingsss|8 years ago|reply
Why is this surprising? Most anti-poverty measures are ineffective. The "war on poverty" has not worked in a single metric. Affirmative action hasn't changed a thing. The only thing that can get you out of poverty is a good family structure, a culture built on performance (Chinese, Indian culture takes this waaaay to far, but it's a start).
[+] Zungaron|8 years ago|reply
Social Security is an anti-poverty measure, and it's the most successful thing the US government has ever done. Turns out that giving people money is a great way to solve the problem of not having enough money.
[+] tootie|8 years ago|reply
You'll need a lot of citation for that. Also, Affirmative Action is decidedly not an anti-poverty program. It's an anti-bias program. And the comparison to China and India is apples and oranges. Aside from the fact that both countries have hundreds of millions of people in poverty, their success has been in industrializing agrarian societies. America is pretty far past that point. Our levels of absolute poverty (penury) are already near zero.
[+] OscarCunningham|8 years ago|reply
I'd say that giving money to people is good if it makes them happy at the time. If it improves outcomes even after it's taken away then that's even better, but it's not necessary for the success of the program.
[+] jellicle|8 years ago|reply
So if you actually read what the program is here: Provide families with a average of $179/month if and only if they jump through a whole bunch of hoops, from doctor visits (which they have to pay for) to school attendance to working more hours (each of which must be documented by the program participants), and then although the program did reduce poverty (give people money, they're less poor), it didn't make them into upper class people magically. So it didn't achieve its goals.

Probably the average participant ended up spending dozens of hours doing bureaucratic tasks each month to get that $179.

This is neoliberalism in a nutshell.

Meanwhile, worthy people like the Koch brothers can get a $1 billion to $1.4 billion (estimated ANNUAL benefit from most recent Trump tax cuts to them personally) donation straight from the Federal Treasury and have to do exactly nothing to show that they "deserve" it.

[+] saint_fiasco|8 years ago|reply
The doctor visits were probably necessary to measure the health outcomes. In a real-life version of the program, maybe they wouldn't be necessary.

It's still silly that the participants had to pay for them in the study.

[+] MechEStudent|8 years ago|reply
Welfare is engineered to fail, and it fails. You can't build a system by American political committee and expect it to actually work.

There are known good solutions for poverty that work reliably and consistently well. That isn't what the US welfare system is engineered for. It is engineered to put money in the hands of political donors, not resolve poverty.

The solution to resolving poverty, much like the Buffet rule for politicians, would work overnight, but will never be implemented. Buffet says a law that says no standing politician is eligible for re-election in a year when minimum true GDP year-over-year growth for the last 2 years has been below 3% would work. He is right.

A similar law, based on "theory of constraints" and directly extractable from the pages of "the goal" would work for poverty, but has (sadly sadly) the same political palatability as drinking a gallon of raw sewage.

Dang this lost, broken, wrecked political system and the scoundrels who are in power and abuse it.

[+] saint_fiasco|8 years ago|reply
> Buffet says a law that says no standing politician is eligible for re-election in a year when minimum true GDP year-over-year growth for the last 2 years has been below 3% would work. He is right.

There is no way Buffet isn't aware of Goodhart's Law. He is smart. Are you sure you didn't misunderstand him somehow?

[+] valar_m|8 years ago|reply
> There are known good solutions for poverty that work reliably and consistently well.

Can you give some examples?

[+] danieltillett|8 years ago|reply
You do realise what would happen if you used this rule - our data on GDP would cease to be accurate (not that it is too accurate now).

The basic problem is the politicians work for the owners and the poor are not owners of anything.