Breaking the Grip of Poverty by Changing Irresponsible Habits

Can people break out of poverty by changing bad habits?

New York City Mayor Michael Bloomberg is experimenting with a program to defeat poverty by rewarding good behavior. 

Opportunity NYC is a privately-funded plan that will hand out cash to low income people for responsible conduct like doing well on school tests ($300), holding a job ($150) or visiting the doctor ($200).  Proponents believe many people languish in poverty because of destructive lifestyle choices that they can change and that the key is motivating them to take on better habits.  

Studies show that conditional cash transfer programs (CCTs) similar to Opportunity NYC have achieved stunning results in Latin America, but the Associated Press largely ignores these findings while citing critics who dispute the notion that people can get out of poverty by taking responsibility for their behavior.

While the AP refers to the Latin American programs briefly, it doesn't explain how well they have worked:  “The rewards have been used in other countries, including Brazil and Mexico, and have drawn widespread praise for changing behavior among the poor. Mayor Michael Bloomberg traveled to Mexico this spring to study the healthy lifestyle payments, also known as conditional cash transfers.”

In contrast, AP devotes nearly 18 percent of the words in its news story to “critics” who believe behavioral change is not the way to address poverty:  “But some critics have raised questions about cash reward programs, saying they promote the misguided idea that poor people could be successful if they just made better choices.”

AP cites the co-founder of Inclusion, a Washingon, D.C.-based research and policy organization:  “'It just reinforces the impression that if everybody would just work hard enough and change their personal behavior we could solve poverty in this country, and that's not reflected in the facts,' said Margy Waller…Waller, who served as a domestic policy adviser in the Clinton administration, said it would be more effective to focus on labor issues, such as making sure wage laws are enforced and improving benefits for working people.”

But evidence from south of the border proves that changing behavior really does work to reduce poverty and boost personal health and education.  

Chile devoted less than .01 percent of national income to CCT between the mid 1990s and the mid 2000s.  The International Poverty Centre (IPC) found that CCT programs like Chile Solidario were responsible for 15 percent of the reduction in income inequality during that period.    

In Brazil, 25 percent of total personal income is derived from social security programs while only 0.5 percent comes from CCT, but CCT accounted for 21 percent of the decrease in income inequality between 1995 and 2005 while social security programs had no positive effect.

Nicaragua's experimental CCT program, Red de Proteccion Social (RPS), reduced the number of people living in “extreme poverty” in an intervention group by 21 percent between 2000 and 2001 and 15 percent between 2001 and 2002, according to a 2004 International Food Policy Research Institute study.

CCT also improves poor children's health and education.     

The percentage of children (12-23 months) with vaccinations increased from 35.4 to 81.9 percent under Nicaragua's CCT program, according to a 2003 World Bank policy research paper.  

The UK's Institute for Fiscal Studies discovered that only 23.6 percent of children under Columbia's CCT program had diarrhea in the 15 days prior to the study, compared to 39 percent in the control group.  Mexico's Progresa program reduces all illness in targeted children (ages 0-5) by 12 percent. 

In Nicaragua, RPS increases the number of children enrolled in primary school 68 to 92 percent while Columbia's Familias en Accion increased high school enrollment by 11 percent in targeted groups. 

 “In contrast to many development programs, the recent expansion of conditional cash transfer programs throughout the Latin America and Caribbean region is based on fairly solid evidence of program impact,” wrote Laura Rawlings and Gloria Rubio of the World Bank. 

Rawlings and Rubio argue CCT programs are not only more effective than regular welfare programs, they are also more cost effective: “In Mexico, the evaluation revealed that CCT investments are delivered in a cost-effective manner…the administrative costs of delivering cash to poor households appear to be small relative to the costs of previous Mexican programs…”

Rewarding the poor for good behavior really gets results. 

Will New York City point the way to a savvy new method to fight poverty in the United States? 

David Niedrauer is an intern at the Culture and Media Institute, a division of the Media Research Center.         

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