Tuesday, October 6, 2015

Cash for Good Behavior

As technology becomes better and better, it seems like the world becomes smaller and smaller.  And with that comes an awareness that didn’t used to exist.  The needs of poorer countries and communities can no longer be ignored.  As human beings, we have the responsibility to do something to help make their lives better.  And why can’t we all live comfortably?  By this, I don’t mean we have to all live the same, for comfort is subjective.  But we should all be able to have the basic needs that provide a certain comfort level.  To achieve this, innovation is absolutely necessary.  Yes, the need is great, but government funds are tight.  Therefore, we must become innovative with the way we pursue innovation.  This required some forward thinking that resulted in some potential solutions.

In Brazil, there is the concept of the Bolsa Familia (Family Grant).  It is essentially a program based on conditional cash transfers – families meet certain requirements, and as a result, get paid a certain amount of money from the government.  Mothers are educated on nutrition and disease prevention, the entire family must go to regular medical checkups, and sometimes there’s payments for school supplies and even finishing high school.  Similar programs are already used in 40 countries worldwide.  In these countries, there is evidence that it is working.  The poor get a little more money, children are more educated and healthier, and the inequality gap has begun to close.1

One might say such a program would never happen in the United States.  However, there was already a trial run of the program in New York City back in 2007.  While the press was rather negative, “Opportunity NYC-Family Rewards” actually proved to be successful.  There were three kinds of conditions available for three years: education-focused conditions, health-focused conditions, and workforce-focus conditions.  The results weren’t surprising given the success similar programs had in other countries.  The program reduced the amount of families in poverty by 11% and cut those living in “severe poverty” by nearly half.  It also reduced the material hardship for providing food by 7 percentage points and for making ends meet by 8 percentage points.  Parents were more likely to have bank accounts and were less likely to use check casher services.  Parents were even more likely to pay their children an allowance.  A few more statistics are listed at the bottom.2

So why has this not been implemented elsewhere in the United States?  Cities like Atlanta and New Orleans that have the greatest inequality gaps in the United States could potentially benefit from such a program.  Perhaps this isn't the answer, or the only answer, but it is a start.  

Other Statistics from the Opportunity NYC-Family Rewards Program as taken from Berlin and Riccio’s article “Paying for Good Behavior”:
  • Reduced the proportion of students who repeated the ninth grade by 6 percentage points.
  • Increased the likelihood of having a 95 percent or better attendance rate in year 2 by 15 percentage points.
  • Increased families’ consistency of health insurance coverage by 2–3 percentage points.
  • Reduced reliance on hospital emergency rooms for routine care by 2 percentage points and increased receipt of preventive medical care.
  • Increased receipt of at least two preventive dental care visits by 10 percentage points.



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