
Disappointing Findings on Anti-Poverty Cash Transfers in the USA - gwern
http://www.straighttalkonevidence.org/2017/09/22/disappointing-findings-on-conditional-cash-transfers-as-a-tool-to-break-the-poverty-cycle-in-the-united-states/
======
jf
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](https://en.wikipedia.org/wiki/Opportunity_NYC)

~~~
wutbrodo
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.

~~~
brudgers
$2k a year without strings attached is non-trivial. Tying the money to
activities that may come with direct or indirect costs may make _earning_ the
money non-rational. At the granularity of paychecks, it's less than $45 a
week. That's about four hours overtime at minimum wage. Or four hours of part
time work at $11/hour.

The value proposition of extra work is pretty straight forward. There's no
bureaucratic process that might deny payment. There's no dependency on a
health care provider or school filling out the paperwork correctly in a timely
manner and correctly where "correctly" means to the satisfaction of
bureaucratic process structured to say "no."

~~~
evolve2k
I'm really surprised now that consideration of the 'quantum of funds' was not
mentioned at all in the report, even as a footnote.

On face value, I would argue that $45/week extra although appreciated is not
significant.

As a thought experiment it's in the scale of, 1hr week spend more time help
kids with homework, 1hr spend additional time job searching, 1hr deal with
program administrative/reporting requirements.

If a family say rewards themselves with a night out once a week for a dinner
or movies etc, these funds are quickly gone.

I think the scale here implies an incentive based around addressing a lack of
will e.g. "Well if they just had a little more encouragement they'd spend more
time helping their kids with education and seeking employment and good
health".

At this scale it does not address what I'll call 'incentive based on providing
significant additional means for positive risk taking behaviour and structural
optimization'.

I define structural behavior as when a family makes significant changes to
their own setup towards have an effect; like moving closer to the school,
hiring a tutor, pursuing course further studies part time (2-3 days a week).

Although the research process seems robust I agree the low quantum of funds
discounts the greater significance of the findings.

TLDR; Summary of findings: 'When we gave poor familes enough weekly funds to
go out for dinner once a week alongside a bunch of criteria to seek
improvement in their life, it made little difference'

------
olympus
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.

~~~
stevenwoo
I can't find the link right now but IIRC there was a study that
counterintuitively showed the yearly payments program to Alaska residents
(from petroleum extraction taxes) increased the likelihood of poorer people
taking on more work.

~~~
neaden
Was it this one?
[https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3118343&...](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3118343&utm_content=buffer0e9c8&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer)

~~~
stevenwoo
Yes, though there was a news article this month about it and other studies
that linked to all of them (they talked about different aspects) that I was
searching for, it's a small impact.

------
btilly
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...](https://buildingpharmabrands.com/2013/05/27/the-ad-that-created-a-
habit/) 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...)

~~~
valar_m
>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.

~~~
btilly
"The problem" I am discussing was the problem causing this program to not work
as desired.

The problems that lead to poverty are another story. They are indeed complex.
And any discussion of it is made harder by the fact that people superimpose
their morality+politics on top of the discussion.

I don't even want to begin to tackle that...

------
SrslyJosh
> 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
> 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
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
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](https://www1.salary.com/NY/Social-Worker-MSW-Salary.html)

~~~
gamblor956
Employees do not actually cost 2x their salary in benefits, payroll taxes,
etc. The 2x includes office space and the associated costs of running the
office, and a Silicon Valley markup for other benefits like free food and
luxury shuttle service. For most companies, an employee's total cost 1.25-1.5x
of salary.

Most government agencies generally own the land and buildings in which the
agencies are located (excepting agencies which entered into lease-back
arrangements...). Whether or not those savings are eaten up by retirement
benefits depends on the jurisdiction.

Source: I've worked in Finance Departments and have actually seen the cost
side.

~~~
olympus
Sure, but that was just a thought experiment to show that ~50% efficiency
isn't some insanely low number. If you wanted you could ask for their records
and dig in, and I bet most people would find each individual expense is
reasonable. Then you add it all up and are somehow still surprised at how much
running a large scale operation really costs.

And sure, we can delete the cost of office rent for government workers, but
you have to add in the nice benefits package and you have to add in all the
mileage they get reimbursed for driving their cars, and the fact that a
considerable portion of their time is lost in training and meetings that don't
directly support accomplishing the CCT's core mission. None of those things
were included in my thought experiment, and erode the efficiency a little bit
at a time.

Source: Am statistician employed by the government.

------
setgree
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](https://economics.mit.edu/files/10654)

------
ballenf
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.

------
ereli1
It's interesting to see approaches that have been documented to fail in
eliminating poverty in developing countries
([https://chrisblattman.com/2013/06/27/why-cash-transfers-
to-t...](https://chrisblattman.com/2013/06/27/why-cash-transfers-to-the-poor-
are-not-the-next-big-thing/)) failing in a developed country.

~~~
wutbrodo
Most of the excitement around direct cash transfers' effectiveness in
developing countries is _unconditional_ cash transfers. The incentive
structure (and goals of the program) are quite different.

------
ams6110
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
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.

~~~
ereli1
welfare is only needed if the labor market is allowed to create jobs that
don't provide viable living wages. If given a choice, people choose well-paid
work of reliance on welfare. The problems do start when full-time employment
doesn't prevent a family from being poor. This happens because wages were
allowed to drop to a level that doesn't support decent human conditions.

My guess that since addressing this angers people who would hope to see wages
low so they can maintain their business that has grown to be dependant on
cheap labor - it's much easier to talk about lump sum transfers (conditional
or conditional) as those do not impact the cost of labor, unemployment or
living standards.

------
cortesoft
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
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?

~~~
frgtpsswrdlame
I think it's dangerous to take your situation and apply it to everyone in
poverty. Most people are there because they _don 't_ have a way out even if in
your specific circumstance that wasn't the case.

~~~
bequanna
> Most people are there because they don't have a way out ...

You're refuting an anecdotal example with an unsubstantiated claim.

~~~
frgtpsswrdlame
Then they should get equal weight. I know poor people who are there do to
uncontrollable circumstance - bad schools, sick family members, take your
pick. I think if you exist in a western country and you don't know a single
person who is poor by virtue of circumstance and not by choice then you're not
doing near enough to leave your bubble.

------
funkythingsss
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
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.

~~~
ams6110
It helps old people who otherwise had nothing. But we're also giving money to
a lot of people who don't strictly need it, or who had the means to save for
their own retirements.

------
OscarCunningham
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
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
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
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.

~~~
valar_m
> There are known good solutions for poverty that work reliably and
> consistently well.

Can you give some examples?

~~~
danieltillett
Science and technology. Has been the only thing that has gotten the world out
of the default historical state of 99% poverty.

~~~
valar_m
Sounds like you're answering "What strategy may work to solve poverty?" or
something close to that. OP said there are "known good solutions for poverty
that work reliably and consistently well". I'm interested to hear what is
_known_ to work, not what _might_ work.

~~~
danieltillett
No science and technology are the only things that has been shown to work.
Since the industrial revolution the same playbook has been applied
successfully in country after country. Look at China. It was not until they
allowed science and technology to be used to its full capacity did they drag
the vast majority of people out of grinding poverty.

The parts of the world where poverty is still high are those where science and
technology have not yet arrived.

