
New Findings from War on Poverty: Just Give Cash - joe5150
http://www.bloombergview.com/articles/2015-10-09/new-findings-from-war-on-poverty-just-give-cash
======
scholia
Did anybody actually read the story?

The key observation is that a study published in Nature _" found a correlation
between child brain structure and family income. Simply put, family income is
correlated with children’s brain surface area, especially among poor children.
More money, bigger-brained kids."_

This is supported by the Cherokee study: when the families became a bit better
off ($4,000 a year) the kids did better when they grew up.

So it's missing the point to argue about how grown-ups might (or might not)
"waste" money and whether cash is better than other forms of welfare. The
point is that bringing up children in poverty creates a worse outcome for
society as a whole.

The fact is that $4,000 a year for 20 years is a very small amount compared
with the cost of US police, courts, and prisons. If a poor kid grows up, gets
a job and pays taxes, that's a massive win _for society_ compared with the
same kid growing up in the sort of deprivation that leads to a life of crime
and jail.

~~~
yummyfajitas
Will the _average_ Cherokee child consume $80k of police/court/prison services
during their lifetime? That's breakeven. Assuming "massive win" means another
$80k of cost savings, that means that absent this intervention, the average
Cherokee will cost society $160k over their lifetime.

Is this really true? Is the average Cherokee a criminal who spends 3 years in
prison (google suggests prison costs a bit under $50k/year)?

~~~
ddlatham
Agreed that it seems unlikely an average child would grow up to use $80k less
in police/court/prison services, but much more persuasive to me would be a
case that they produce $80k more value to the rest of society, from less use
of such services to paying more taxes, to being better neighbors, employees,
employers, and citizens.

~~~
scholia
80k is roughly the cost of jailing one US adult for two years.

"In total, 6,899,000 adults were under correctional supervision (probation,
parole, jail, or prison) in 2013 – about 2.8% of adults (1 in 35) in the U.S.
resident population."

[https://en.wikipedia.org/wiki/Incarceration_in_the_United_St...](https://en.wikipedia.org/wiki/Incarceration_in_the_United_States)

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asuffield
There's more depth here than "just give cash".

What we've seen in study after study is that if you take low-income people who
are struggling and give them more money, they use it in ways that improve
their lives, they become more productive, and this has profound long-term
impact.

At the same time, I don't think anybody really disputes that giving moderate
amounts of extra cash to a heroin addict is unlikely to improve their lives.
They need medical treatment before anything else.

I've never seen a study which looked at extra cash injections for long-term
unemployed. That would be an interesting one. I would be unsurprised to find
that cash alone was insufficient to solve their problems; the most obvious
thing they need is education.

My point here is that cash clearly helps in some - probably most -
circumstances. But "just give cash" is insufficient; we still need to work on
all the other things as well.

~~~
mnre4kgnk4eg
"just give cash" is sufficient, because the other things are just as likely to
be fall-out from the bad choices that may have been the best of a bad
situation (heroin usage, dealing, theft, etc, etc...).

There is another comment below about giving in-kind stuff instead of the more
fungible cash, but the problems with that (and with your example) boil down to
that being moralizing. People want to moralize rather than enable. If a person
has the means and doesn't use them, then and only then, can we claim some
other problems remain to be fixed, but we cannot even logically conclude that
the problems are blocking something debatably-desirable at this point. We
can't have a non-armchair/inherently-smug-and-preachy discussion until
everyone has a basic income.

This problem isn't going away, and is only for lack of numbers. Even someone
who wants to die by heroin would be better off being allowed to, than forcing
them to harm others (or themselves differently) in order to get there.

~~~
vixen99
Just who is 'moralizing','smug and preachy' here? 'People want to moralize
rather than enable'. Gosh! That's the debate over isn't it? Don't review
current and awaited evidence just 'enable'.

Purely anecdotal but please <enable me> and I'll quit economic activity to
devote myself to life-improving activities (and a big thank you to whoever is
continuing them for my sake). Fortunately I'm an odd-ball and no one else
anywhere would even think to behave as I would. So, my story is not only
anecdotal but completely irrelevant.

~~~
TeMPOraL
> _Purely anecdotal but please <enable me> and I'll quit economic activity to
> devote myself to life-improving activities (and a big thank you to whoever
> is continuing them for my sake). Fortunately I'm an odd-ball and no one else
> anywhere would even think to behave as I would. So, my story is not only
> anecdotal but completely irrelevant._

You'll get bored shitless after a week of doing nothing with your life
improvements to make a point, and suddenly you'll be back here having a
productive input in the society, be it arts or engineering, services or
thinking. But maybe you _do_ really want to make a point and decide to just
drink and be merry. That would still be a significant improvement for the
society over having you perform "economic activity" in advertising or other
bullshit industry we keep because we're too big on puritan values to even
consider that slaving away your life for food and shelter isn't the optimal
way of living.

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zerebubuth
Many of these studies appear to be variations on the form "We selected some
people, gave them some money and told them we'd be back to check up on how
they were doing." I wonder if there's a significant effect from the
expectation that being part of the study will improve one's life. Perhaps
receiving attention from authority figures (PhD or MD), and potentially their
judgement, might alter behaviour in similar ways to the "honesty box"
experiment [1].

It seems like there might also be some bias in selection - presumably one has
to consent (in writing) to be part of a long-term study. Perhaps this
encourages participants to think of the future and might influences decision-
making away from short-term goals and towards "investment" uses of the money
rather than ephemeral ones.

I'm looking forward to seeing the results of their differential experiment,
and whether there's as much difference between the $333 and $20 groups as
there is between the $20 group and the "$0 group" of the general population.

[1]
[http://rsbl.royalsocietypublishing.org/content/2/3/412](http://rsbl.royalsocietypublishing.org/content/2/3/412)

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yummyfajitas
There is unfortunately a large political danger with giving cash. If you give
cash, then it becomes possible for pundits to agitate for more assistance on
the theory that "you can't live on $X". When poor people are explicitly given
a room, 3 square meals/day, and government issue poor-people sweats, it's
pretty hard to argue that they are somehow lacking anything necessary to live.

Based on this article, there is also no reason to believe that cash assistance
rather than in-kind assistance is necessary. The proposed mechanism is
"Parents are happier because they have more money, leading to less fighting
within the family. This lowers stress on kids..." But in-kind assistance would
also lower stress since parents wouldn't _need_ money.

In-kind assistance has the added benefit that parents can't divert public
assistance intended for children's welfare into other goods (e.g. alcohol,
tobacco, drugs, junk food).

~~~
jellicle
I don't understand the conservative desire to centrally manage the lives of
the poor, taking away choice and freedom in favor of centralized bureaucracy.

~~~
Turing_Machine
What? I assure you that the the meddling, micromanaging social services
bureaucracies are not run by "conservatives". Far from it.

A conservative or libertarian model would tend more toward a negative income
tax or guaranteed basic income than what we have now. In fact, Milton Friedman
was a big advocate of the NIT.

~~~
TheOtherHobbes
Neither of which are examples of centralised bureaucracy?

That aside, conservative politicians aren't famous for demanding that the poor
be given free money.

The current British conservative government seems intent - quite literally -
on starving the poor to death. That seems to be more usual for conservatives
than aggressive agitation for a guaranteed basic income.

~~~
Turing_Machine
"That aside, conservative politicians aren't famous for demanding that the
poor be given free money."

Milton Friedman is just about the most famous conservative/libertarian
economist there is. Nobel Prize, even.

~~~
dllthomas
Arguably not a politician, though.

------
rtehfm
Money is a mechanism that, in a way, insulates us from a variety of problems
that, when reduced, allows us to focus on other things. For instance, when
you're not worried about where your next pay check is coming from, you can
invest that energy elsewhere. Reading, continued education, practicing your
craft, etc. When one is no longer burdened by the hunt, he's available to
venture into other activities.

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joe5150
"We examine how a positive change in unearned household income affects
children’s emotional and behavioral health and personality traits. Our results
indicate that there are large beneficial effects of improved household
financial wellbeing on children’s emotional and behavioral health and positive
personality trait development...Parenting and relationships within the family
appear to be an important mechanism. We also find evidence that a sub-sample
of the population moves to census tracts with better income levels and
educational attainment."

Signs and wonders....

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littletimmy
Isn't this exactly what Milton Friedman advocated for some 40 years ago? Why
is this just being "discovered" now?

~~~
kragen
Basic income guarantees have been advocated by many people in many centuries.
One issue is that we don't know how they would work out in practice in modern
societies, and the question is very controversial, which makes it hard to get
good information on. This is some information that tells us that they might
work out pretty well.

~~~
crocal
Err... There are plenty modern countries with basic income guarantees already.

~~~
kragen
Could you name one, then?

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jluxenberg
It seems that we can give money to those in need, and see a "return" on that
money in terms of increased employment and generation of value. Sounds like an
investment to me.

The government is the unique position; they are able to realize a gain on this
via income tax revenue. Maybe this can be done via basic income? Could we pass
a basic income bill as an "investment in America" and is there a model where
the government actually makes a return on this investment?

------
afarrell
I'm also curious if we could reduce the number of children born into poverty
by offering to pay men $2,500 plus medical costs to get a vascectomy.

~~~
digimarkup
While avoiding the "should this idea be implemented" question for a second,
I'm wondering about the engineering issues here: is it more efficient to pay
men for vasectomies or women for tied tubes.

Women are subject to meaningful rate limits. Ultimately the number of women
determine the rate at which a population can reproduce.

A man can mate with many women, so eliminating a single man from the
reproductive pool might have a significant impact. However, the women that man
could impregnate might simply end up impregnated by someone else.

Not entirely sure how to model this.

~~~
jholman
When you get around to building a statistical model, make sure you take into
account that vasecotomies cost about 1/4 as much to perform (e.g. $700 vs
$2800, in the US), and have are something like 20x less likely to have
complications (although complication rates are low for both).

source:
[http://www.ncbi.nlm.nih.gov/pubmed/19041435](http://www.ncbi.nlm.nih.gov/pubmed/19041435)

~~~
afarrell
It would be cheaper to do IUDs than tubal ligation for women. There was a bill
that proposed this in Arkansas, but it was shot down for being coercive.

I think that the argument from "avoiding coercion" is silly. First, because
that isn't what literal coercion means. But moreover, At federal minimum wage,
that money only takes 350 hours to earn. Over 18 years, thats 20 hours a year.
If someone doesn't value being a parent enough to work an extra 23 minutes a
week, then it doesn't seem like that is a right they value particularly
highly. Also, there are laws that, taken together, coerce parents into working
more than 23 minutes a week to support and care for their children. If we
aren't willing to get rid of laws against child neglect, why are we worried
about coercion in this case?

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cm2187
Parents stimulating their children does probably more to the brain structure
than a check in the mail. And educated parents tend to better stimulate their
kids. I remember a French statistics from the 90s showing that about 25-30% of
the kids going to the Ecole Polytechnique (top engineering school in the
country) come from families which do not own a television. Not sure there is a
direct effect between watching TV and success but there is a direct effect
between good parenting and success. This is why a good education system is
fundamental to make up for what sometimes the parenting does not provide.

The other possibility, though not a politically correct one is genes.
Rationally I find it hard to believe that genes play no role in our
intellectual capacity, and they would mechanically self perpetuate poverty.

Without any hard science to back it, my intuition is that a brain is like a
muscle, people are born with different muscle structure, largely driven by
genes (but with a certain degree of randomness). So not everyone can make it
to the olympics. But going to the olympics also requires hard work and
training. If all one does is eat burgers and watch TV, the only outcome is to
become obese irrespective of the muscle structure.

~~~
ryandamm
>Without any hard science to back it

I think this is the problem. Here's research that's trying to find some
quantitative data about this issue, trying to cut through our received wisdom
and intuition. And the response is... rooted in received wisdom and intuition.

(I don't mean to dispute your proposed model -- merely to suggest that us
sitting here and speculating about models is precisely the wrong way to
understand these issues.)

Frankly, I'm a little disappointed with the tenor of the discussion on this
site; it seems the collective will to libertarianism is stronger than the
belief in empiricism. I'm happy to be proven wrong, though.

~~~
cm2187
Only science can really close this debate, but we don't really understand how
the brain works, what drives intellectual capacity, character, sexual
preferences, etc. So I don't see how we can do anything else than invoke what
each of us think is our common sense to form an opinion until science tells us
what really happens.

~~~
cookiecaper
You have far too much faith in "science". Academics are human, and subject to
human frailties. Studies are often sponsored or otherwise "encouraged" by
outside parties with a certain interest. Academics often modify their reports
until they get a result that "demonstrates" their desired outcome.
Conventional wisdom, supported by the day's best "science", is regularly
disproved.

Consider that every side in every political debate believes the evidence
supports their opinion, and that the evidence the other guys are using is a
sham. Although academics have a bias in aggregate, which should _not_
automatically be mistaken as valid consensus, you can usually find at least a
few outlying reports to support any desired political position.

What it boils down to is that people believe whatever they want, probably for
emotional reasons, and they can't really be convinced otherwise. They're only
ready to come to the table when those emotional links have been severed by
something in their life experience.

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JorgeGT
> _giving poor families money, on top of the benefits they already receive,
> improves their children’s behavior_

I don't think anyone questions that _extra_ money does good. The big question
in the fight against poverty is: given X available welfare dollars per family,
what is the optimum allocation between giving them as benefits or giving them
as hard cash?

~~~
CuriousSkeptic
Well theres also reason to question the size of x. If substantial amounts of
money are wasted in the effort of allocating x, might it be better to just use
that money to increase x and go for a simpler allocation model. For example
equal amounts to everyone.

After that you must consider the systematic effects. If you do manage to
increase x and allocate it to the poor. What will it do to the economy? There
is a chance that it will feedback into increased tax revenue, which again
raises x. More money allocated to the poor means more money spent on things
needed by the poor, which means increased demand for certain goods and so
forth. It's also possible that the same poor, now equipped with secure
funding, starts new business to fill that demand which creates jobs and more
taxable incomes.

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rgovind
A related view expressed by India's central bank governor

[http://www.bloomberg.com/news/articles/2014-08-11/rajan-
urge...](http://www.bloomberg.com/news/articles/2014-08-11/rajan-urges-cash-
transfers-to-dilute-power-of-indian-oligarchs)

"Cash would empower the poor to choose where to buy goods, providing an
alternative to government-run monopolies and creating competition in the
private sector"

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unclebucknasty
These studies seem to crop up now and again.

What's funny is that we have devised this completely contrived way of divvying
up the world's resources, including this notion of private ownership over key
natural resources. But, in truth, no one needs to go hungry, without shelter,
water, etc. There is enough.

But, then, we step back and say, "what if we give these people, who currently
cannot subsist under this scheme, some marginal share of the resources we've
convinced them by fiat are someone else's to give them in the first place?"

Then, of course, we measure their outcomes within the context of the same
scheme, and ponder other ways to help them.

Yet, the scheme itself is much more seldom questioned. That one person can
earn bilions from what's pulled from the earth we all inhabit, while others
die from lack of access to the same should be expected to create irreparable
distortions in outcomes. But, it's somehow accepted as an unchangeable, almost
natural premise, even as we search for solutions.

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fiatmoney
Did the "better outcomes" actually result in a _net_ increase in tax revenues
/ reduction in welfare spending (ie, more than the 4k)?

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raykaye47
Poor people are ALREADY given cash. Its called EBT and you see them
squandering it on junk food and trading it for cigarettes.

~~~
PhasmaFelis
You don't actually know any poor people, do you.

