Carrots Without Sticks
March 31, 2010, 03:57 PM
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From the New York Times, an article on an experimental program in NYC that had been very popular among economists: using carrots (but no sticks) to get the poor to behave better.
City to End Program Giving Cash to the Poor

An unusual and much-heralded program that gave poor families cash to encourage good behavior and self-sufficiency has so far had only modest effects on their lives and economic situation, according to an analysis the Bloomberg administration released on Tuesday.

The three-year-old pilot project, the first of its kind in the country, gave parents payments for things like going to the dentist ($100) or holding down a full-time job ($150 per month). Children were rewarded for attending school regularly ($25 to $50 per month) or passing a high school Regents exam ($600).

When the mayor announced the program, he said it would begin with private money and, if it worked, could be transformed into an ambitious permanent government program.

But city officials said Tuesday that there were no specific plans at this time to go forward with a publicly financed version of the program. In an announcement at BronxWorks, a nonprofit social services agency, Mayor Michael R. Bloomberg pointed to a few examples of success: High school students who met basic proficiency standards before high school tended to increase their attendance, receive more class credits and perform better on standardized tests; more families went to the dentist for regular checkups.

But the elementary and middle school students who participated made no educational or attendance gains. Neither did high school students who performed below basic proficiency standards before high school. ...

The program was certainly expensive: Mr. Bloomberg and Linda I. Gibbs, the deputy mayor for health and human services, traveled to Mexico to learn more about Oportunidades, the welfare program there on which the New York City effort was based.About $40 million in private donations, including from Mr. Bloomberg’s foundation, was collected to finance the effort, called Opportunity NYC Family Rewards. Two years into the program, more than $14 million had been paid out to 2,400 families. An additional $10.2 million is for operating costs, and $9.6 million for research and evaluation.

So, poor people got $14 million and middle-class administrators and researchers got $19.8 million? And what happened to the other $6.2 million in donations?
While most behavioral changes were not large, the cash provided to the families had a short-term effect: Those who participated earned, on average, more than $6,000 a year in the first two years. Largely as a result, those participating families were 16 percent less likely to live in poverty.

The families used the money to pay for basic living expenses, school supplies, electronic equipment and going to the movies, among other things.

More than 80 percent of the families were led by a single parent, 43 percent had three or more children and just over half of the parents held jobs. All lived in low-income areas in the Bronx, Brooklyn and Manhattan....

Ms. Gibbs said many families had been perplexed by the guidelines that were laid out for them. Cash payments were eventually eliminated for actions like getting a library card and follow-up visits with a doctor.

�Too many things, too many details, more to manage in the lives of burdened, busy households,� Ms. Gibbs said, standing next to the mayor on Tuesday. �Big lesson for the future? Got to make it a lot more simple.�

A good lesson to learn.
The city has been somewhat sensitive about the results of the program. Ms. Gibbs and other city officials cautioned that the report released on Tuesday reflected only initial results, and said that they were in line with other early results from similar conditional cash transfer programs in Latin America.
A program in Mexico that bribes peasant moms to not pull their kids out school and put them to work after 4th grade in the fields but instead keep them in school through 8th grade so they can learn enough math to be carpenters would appear to be less vulnerable to diminishing marginal returns. In contrast, a program in America where a goal is, say, to keep kids from dropping out after 10th grade and have them learn enough math in 11th and 12th grade to get a fancy Regents' diploma would have a big diminishing marginal returns challenge.

On international tests of schoolchildren, Mexican-Americans average quite a bit higher scores than Mexicans, which suggests that Mexico has a long way to go to improve education. By the way, Mexico has a single national schoolteachers' union that is so powerful that teachers' jobs in government schools are becoming hereditary. Mexico has been like the old Soviet joke about how they pretend to teach us and we pretend to study.

But the whole concept of diminishing marginal returns appears to be off limits for thinking about education.

�There have never been these overnight, miraculous turnarounds,� Ms. Gibbs said. �These are programs that are working on deeply entrenched, long-term behaviors.�

One Brooklyn family who participated in the program said they collected more than $7,610 in two years. Janice Dudley and her 16-year-old daughter, Qua-neshia Darden, of East New York, said they received rewards for school attendance, good test scores and receiving regular medical checkups.

How much would it cost to bribe new mothers not to name their daughters "Qua-neshia?" Whatever it costs, it would probably be worth it. What employer could read the name "Qua-neshia" on a resume without betting that if he hires her, she'll sue for racial discrimination the first time she doesn't get the promotion she wants?