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.
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.
compliance and monitoring, most likely. The cash was conditioned on various attendance metrics, and the data collection process with such things is never as smooth as you'd like (I did a stint at a non-profit that ran experiments like this on behalf of economists).
Why would it? The study said that they found no significant effect, not that the return was poor relative to costs. It's possible that shifting the saved administrative costs into more aid would appreciably change the outcome, but it seems more likely that it's a structural problem with the program: ie, that CCTs are optimizing the wrong input.
Regarding whether the effect would have been larger if the subjects got more cash -- in the original Progresa study, the ` size of the cash transfer is large, corresponding to about a 25 percent average
increase in income of households living in extreme poverty' [0] (p.4). (Though in dollar amounts, if they are using the 'extreme poverty' metric of $1.25/day/person, we're talking about a lot less money in absolute terms). So there's something to this.
But this is hard to square away with this newest study's findings of modest adverse impacts on labor participation rates. This, combined with null health effects, suggests that the CCTs are performing an income substitution effect, and that what people are doing with their newfound free-time is probably leisure rather than other forms of 'work' (i.e. exercising, cooking healthier meals, etc.) that policymakers might wish the subjects undertake.
They also offered things to help people earn more rewards. The brief linked mentions short term tutoring, uniforms for your job, and transportation to interviews. Still seems like a lot of overhead though.
$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."
> $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.
Sure, but we're talking about things that most people would agree is good anyway: kids doing well in school, being healthy, etc. The goal of the CCTs isn't to make people want to do things that they vehemently disagree with: it's to shift the incentive boundary so that they're on the right side of it for things they would like to do anyway.
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'
Going with the previous calculation of $180/month ($2160/year), that's about a 9% annual increase for a family of 4 at the poverty line (I'm seeing stats of ~24/year).
One of the main ways in which redistribution programs are justified is by pointing out that a marginal dollar goes further for a poor person than a rich one. So I would hardly call this a "little" money, relative to baseline.
Having said that, one of the key advantages of unconditional cash transfers is that with much lower compliance/monitoring costs, a much higher percentage of all funds can go directly to the poor. GiveDirectly provides an 'imperfect estimate' of 81%, for the record https://www.givewell.org/charities/give-directly#CashRatios
- Feed 2+ people (white rice is $34/month for 2400 calories/day; chicken is $60/month, whole milk is $80/month; mix and match to taste)
While $2k/year isn't a whole lot of money, it's marginal. If you're living at the edge of what you can afford, even a 9% bump can put you in a much more comfortable place.
But for poor people $100 a month is the difference between eating or not eating some days, or having the heating on or going cold, or buying some books for the kids to read at home, or paying the bills on time vs paying them late.
I mean..even then..not really. That's still not a lot of money at all. I grew up with people who live mouth to paycheck.
A meaningful amount, like $400~$500 a month could make a much more considerable impact. $100/month means "Maybe we can take the kids to a movie one a month or have a nice dinner to help distract ourselves."
$500/month could mean, "We can get all those extra school supplies or put our kids in extra school programs."
Seeing if people would make those decisions would be an equally important study.
These current programs see more designed to encourage people to use free programs with a small monitary incentive. I probably says more about those programs than the impact of the money itself.
An expectation of "we'll use the money for important things after we treat ourselves" is exactly why people oppose these kind of programs. You can't just hand-wave that away.
A larger amount makes more sense in terms of being surer to have an impact. But it would make a widespread program based on those amounts so expensive that there’s probably no point in answering the question. Suppose it was found that giving poor families $20K annually did make a substantial difference? It probably wouldn’t matter because a large scale program based on that amount would probably never get funded.
Here, the question is if we give poor families a small (but not insignificant) amount of cash could that make a diffeeence? I guess the idea is that it might provide just enough to enable at least some of them to do something they would really like to do anyway but can’t quite manage.
Unfortunately, at least according to this, the answer is no. Perhaps we can think of it as a promising idea that didn’t pan out?
IDK, it sure would be nice if we could find a relatively cheap and straightforward solution to wide-spread poverty and inequality. Not exactly surprising that we haven’t, but it still seems worth continuing to try.
Huh? Let me get this straight: you expect people to accept patronage. But you then don’t want the patrons to be patronizing? How does that work?
Generally speaking, aren’t poor people poor because either they don’t know how to be not poor or can’t execute being not poor? Yes, sometimes it’s impossible to execute being rich, like if there is a systematic bias against a certain cohort. But cases like that aside, isn’t it pretty obvious that poor people either cannot or do not know how to not be poor?
Your perspective seems to suggest being poor just happens randomly to random people. But that’s not true. Being poor happens to people who fail to get and keep money from other people. Any time someone talks about patronizing poor people it’s like: yeah either we’re not going to talk about them being poor like that’s a bad thing, or we’re going to talk about it like it’s a bad thing and so maybe then we should figure out what they’re doing wrong when there are other people who are not poor.
Pretending like everyone’s economic actions are equal is insensitive to people who get and keep money and patronizing to people who don’t. Not all economic actions are equally good. Setting money on fire is not a good economic action. It is offensive to the person whose labor created that value. Yet I see poor people doing all kinds of offensive economic actions with money given to them by the state. I see people using benefits cards to buy groceries that I would never buy because they are so expensive or unnecessary. If you don’t want to be judged, don’t take money from other people, because that is literally patronage, which is patronizing.
Being poor is buying a 2 pack of toilet paper for $2 rather than an 8 pack for $4 because even though the 8 pack is a much better deal, the extra $2 will buy the loaf of bread you also need.
This is something that’s easy to forget once you have money: lack of liquidity is expensive. The (ironic) gravity of cash means the more you have the more you get (interest), and the less you have the less you get (interest).
The problem with that theory is that it implies that you could have a self-funding charity that just makes loans that enable such long-term purchases:
"Hey, don't buy the two pack. We'll buy you the 8 pack if you pay us $1/month for the next 5 months." Client saves $3. Charity gets >50% annualized ROR. Perpetual virtuous cycle that ends all poverty.
Why do you think no one's been able to pull off such a charity? Probably because the bottleneck isn't getting the initial capital, but being unable to stick to a plan even when it could pay off long-term.
It sounds like the program in the story is trying to close that gap and give more immediate rewards.
In the third world, to self-starting entrepreneurs who already did the footwork of figuring out how the capital could quickly pay itself back, not the small-unit-buying clients in the American communities that the parent was diagnosing.
(I was originally going to give a caveat about Kiva, etc.)
It's true. Not to mention all the other examples in books like Nickel and Dimed. It's hard and shitty to be poor, and people exploit you.
But you don't end up in endless poverty by making the right decisions. The United States can be a pretty brutal place, but comparing to human history it's actually incredibly forgiving and full of opportunity.
A huge part of "can’t execute being not poor" is a direct effect of lack of resources.
There is also plenty of research that shows that poverty is detrimental to mental health in a way that reinforces poverty. The insecurity from not knowing where your next meal will come from or not knowing were to sleep is a direct cause of poor decision making.
Yup, this is definitely a big part of it. I won't pretend like it's "the whole answer", but "poverty-induced executive dysfunction" is a real contributor to poor people staying poor.
It does seem kinda random to me. "Contrary to popular belief," he wrote over the weekend, "the percentage of the population that directly encounters poverty is exceedingly high." Between the ages of 25 and 60, Rank has found, almost 40 percent of Americans will live at least one year below the poverty line. Yet over time, most also pull themselves back above of it.https://www.theatlantic.com/business/archive/2013/11/a-shock...
Also the #1 reason people go into bankruptcy in this country is medical costs. That's not something that can be "executed".
Being poor happens to people who have failed to get and keep money. Sometimes that starts with you, sometimes your ancestors. Obviously it’s easier to get money if you already have it. But if you’re poor, someone didn’t get it. Could be for messed up, unfair reasons. But it’s that simple. It’s not random.
Getting wiped out by a medical event means you didn’t have health insurance. Health insurance is generally affordable despite what the GOP says, especially if you’re in poverty then you can get some really good Obamacare for free. Not buying insurance is just about the poorest thing you can do. Yes, before the ACA there was the the whole preexisting condition thing. There’s all kind of whack ass stuff out there. But I’m not talking about corner cases. I’m talking big picture. Step one to not being poor is having insurance.
Yes, I was taking it as axiomatic that poor people have less money than rich people. But having more or less money seems to correlate surprisingly weakly with knowledge or behavior. Of course people can do really dumb things but we're not talking about corner cases. I'm talking about the tens of millions of people who get poorer and then less poor without changing their knowledge or behavior very dramatically.
>especially if you’re in poverty then you can get some really good Obamacare for free
Unless you're in one of the many states that didn't expand medicaid coverage. Then you need to make above the poverty line to qualify for subsidies.
>Health insurance is generally affordable despite what the GOP says
Now that the GOP has revoked the individual mandate, the prices are going to keep going up for people on the exchange.
My Brother and his wife get coverage from the exchange and their cheapest plan went up 50%. Average out of pocket (after subsidy) insurance rates went up around the country this year, and they are expected to go up again next year.
True, there is a system which works to make and keep them poor. That's undeniable. It's sort of this abusive relationship between the rich and poor, wherein the rich work really hard to keep the poor poor, but then blame them for it as well. But is there not a way that poor people could escape this system? Is there not some set of actions that the poor could take—and the poor are a strong majority of humanity, right?—that they would extricate themselves from the vice grip of the rich? Have they any agency? Or are they just so hopeless that it's impossible?
> I see people using benefits cards to buy groceries that I would never buy because they are so expensive or unnecessary.
I hear people make claims like this frequently and I always wonder if it could possibly be true. I can't remember the last time I paid any attention whatsoever to what other people were buying in the grocery store, much less their mode of payment. This sounds more like the repetition of a certain strain of conservative mythology (with a strong family resemblance to the infamously fictional "welfare queen") than actual anecdote.
And if it is true: 1) Maybe consider giving your fellow shoppers a little privacy. And 2) I wonder: exactly what groceries are we talking about here that you can be so sure another person, whose life and preferences you know nothing about, is making not just a mistake, but being "economically offensive" by buying them? Voss bottled water is about the only thing I can think of that might fit the bill here.
As someone who grew up poor with parents who worked their asses off and didn't touch drugs or booze - your comment is both in poor taste, and ignorant.
I'd happily give all the crack addicts assistance if it meant no children missed any meals.
> If you're happily giving money to cocaine addicts then you're not being helpful at all.
How about we don't conflate the two issues?
People who have so little money they can't afford food, should get assistance. Full stop.
Crack addicts who are so poor to require that same assistance probably need drug counseling and possible mental health assistance. In addition to the money for food.
If you think throwing it on a card or whatever will stop the addicts from buying drugs - you're mistaken.
Maybe we shouldn't treat people who are suffering as if they deserve their conditions. Maybe we should have more compassion for them, than we do for the corrupt wall street bankers who got massive bailouts in 2008.
Yea, they should get assistance. Just not direct cash, I totally disagree with you in that regard.
What they do need is drug counseling, psychiatric counseling, a safe place to stay, food provided for them, clothing, help finding a job and stable housing arrangement after they are sober. Giving a cocaine addict that is so poor they are living on the streets just cash, is unhelpful. Once they are sober and have proven they will responsibly use money for needed items, then you can give it to them.
As a physician who sees plenty of county patients that are addicts - you know what happens when they get a bunch of money? They spend it on drugs, not on their neglected children or anything else in Maslow's hierarchy. Do-gooders who think handing cash to an addict is helpful, are wrong. You're just wrong and I completely disagree with you, I'm not conflating anything.
So, just to be clear, it sounds you're arguing that we should put barriers on how good people who are homeless/broke should be able to spend their financial assistance - in order to prevent addicts from buying drugs.
That sounds like conflating the issue of poverty with the issue of drug abuse. There is overlap, but I don't believe that the harm to addicts outweighs the help to the people struggling to survive.
There is another way to view this. We might think of these programs as encouraging people to do things that society needs, instead of what they need. Then the payment is there to offset the personal cost.
Note. I've thought about this for all of 10 seconds. I might be 'way off.
I think the insulting part is the subtle insinuation that the money is more likely to be used to buy drugs/alcohol than for the purpose of feeding the recipient or otherwise helping them out of poverty.
Even if 50% of recipients go buy drugs with the money, does it really matter? It probably costs more to enforce these conditions than the percent of funding that would go to drugs. It also creates bureaucratic overhead at the point of distribution.
Further, it’s unlikely enforcing criteria even filters out more drug users than non-restricted payouts do. These criteria are unlikey to be mutually exclusive with drug use. Someone can take drugs and also check all the boxes to meet the “criteria.” Given this consideration, it is clear that attaching conditions to a payout contributes little to no marginal gain in savings or efficency of individual outcomes.
But as other comments note, the conditions themselves are beneficial to both the recipient and those around them. If one person gets preventive healthcare who would not have otherwise, isn’t that a good outcome? Is it a better outcome than if one drug user does not seek or get access to disbursements?
Perhaps a better solution would create tiered payouts that get higher the more conditions you meet. The lowest payout would have no strings attached, but higher payouts would be available to those who fulfill certain criteria.
> I think the insulting part is the subtle insinuation that the money is more likely to be used to buy drugs/alcohol than for the purpose of feeding the recipient or otherwise helping them out of poverty.
> Even if 50% of recipients go buy drugs with the money, does it really matter?
The libertarian dream, however the unfortunate reality is that where the money is supposed to do things like feed your children, you instead squander it on drugs. If the presumption of drugs is too harsh, replace it with something equally stupid like cigarettes, lottery tickets, rent-to-own furniture or some other predatory service that the poor disproportionately participate in. This is not a behavior beneficial to anybody or worth enabling.
This is why we have systems like food stamps (disbursements that can only be spent on food), WIC (disbursements that can only be spent on fresh vegetables, baby food/formula, etc) and so on. Handing cash to people who don't know how to use it responsibly does not spontaneously teach them otherwise.
How about harsher regulations on the predatory businesses?
Yes--I know regulations are not liked.
Rent-to-own is basically extorsion.
My biggest gripe is the payday loan type companies.
Oh yea, federally insured banks should be required to cash checks, without a consumer being a customer.
We have so many laws/regulations that protect businesses; While the poor have the BBC. This is not the America I put my hand over my heart as a kid. I ashamed at what we have become.
Banning that stuff doesn't solve anything except the guilt of the middle-class.
People use payday loans because nobody else lends them money. If you want to help them, offer them loans with better conditions, and you'll see most of those payday shops go out of business.
Both Food Stamps and WIC are USDA subsidy programs for agriculture and food manufacturers. They require you to buy the particular things subsidized to ensure that the funds are directed to the right recipients in the correct ratio, not because of any particular human need.
A very large number of people absolutely do not know what they need, or - if they do - are not sufficiently motivated to pursue those needs. See, e.g., the obesity epidemic, smoking cessation, social security (in lieu of retirement savings), tax refunds (in lieu of adjusting withholding), etc.
Willpower, knowledge, and just plain old wherewithal aren't free and can't just be assumed.
It works both ways as well. Poverty causes stress and lowers self control and cognitive resources. This makes it harder for people in poverty to work their way back out, even if they may intrinsically have the necessary capabilities.
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?
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.
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.
It's not a huge statement. The counterargument, that most poor people are there because they consciously and continuously choose to be poor is ridiculous on its face.
No, it's a massive statement, and I think you're being intellectually dishonest to assert it's not. The counterargument is also a huge statement, none of us are saying it's not.
The only reason the counterargument is slightly more palatable is because it conforms to Occam's Razor.
> because they consciously and continuously choose to be poor is ridiculous on its face
This is a blatant straw man. We are saying they don't make wise choices for a myriad of reasons, not that they intentionally choose to be poor.
Edit:
If you make bad choices in life the end result will be poverty. That doesn't mean you chose poverty consciously.
Sure. All of us here would have made the correct hundred thousand or so choices and avoided the enormous number of traps and inherent dangers of poverty.
We would have gone from poor five year olds to wealthy 30 year olds by force of will.
We would have had the energy and resources and parental support to source our food, health, shelter, and education for our first 18 years because we make such great decisions.
Or: we believe we _are_ good because we _have_ it good.
> we believe we _are_ good because we _have_ it good
No, I'm not going to sit here and let you tell me I didn't make good choices and work hard to get where I'm at.
I paid my own way through college by working nights, got my first job in I.T. by repairing thrift-store computers and selling them on eBay, and chose to work hard in school because I knew it was important.
My parent's money didn't make a difference, what did make a difference was the lessons they taught me, and the interest they took in my education.
> We would have had the energy and resources and parental support to source our food, health, shelter, and education for our first 18 years because we make such great decisions.
There are almost no children in America who don't have access to food, shelter, and education. The only thing you are right about is parental support, but not in regard to food/shelter, what most kids don't have in America are parents who force them to focus on education and financial responsibility.
If you wan't to succeed in America, there are limitless options, most of which are extremely hard. That's the real problem. I didn't get to where I'm at because of my parents. I got there because I worked 60 hour weeks, and studied subjects I cared nothing about, but knew would benefit me in the long run. It was fairly hard, but completely doable.
I'm willing to make the assertion that anyone, regardless of their background or parental support, can go to community college, work to pay their way through, get a reasonable degree, and move into the middle class within 10 years.
Edit:
Forgot to address your other points.
> Sure. All of us here would have made the correct hundred thousand or so choices and avoided the enormous number of traps and inherent dangers of poverty.
If you don't make the right choices, it's your fault. It's unfortunate, but it's still your fault.
> We would have gone from poor five year olds to wealthy 30 year olds by force of will.
I agree, there will always be exceptions. My bigger point is that you must accept N% of failure if all you're addressing is the money part of the equation. My opinion is that N is a much higher number than is socially acceptable.
It's extremely dangerous and rather divorced from reality. Just an anti-PC self-congratulatory tirade. Why posts like this get upvoted is truly beyond me.
> Most people are there because they don't have a way out even if in your specific circumstance that wasn't the case.
I disagree, although I can't really give anything more than the same anecdotal evidence that's already been given. Both of my parents grew up only slightly above the poverty line. It was entirely because of choices their parents made. They didn't make the same mistakes, and are now both well positioned in the middle class. How? Essentially, they both just put themselves through school. That's all it really took. A few loans, and a fast food job on the side, got them the education they needed to break the poverty cycle.
I think the truth is neither of us have enough real evidence to be making the assertions we are making. For every anecdotal case you find of someone stuck in poverty, I guarantee I can find a case of someone who made a few simple choices and got out of poverty. What we really need are more studies like this that produce empirical data on the subject. Then we can start to argue whether poverty is a choice or a social class people are forced into.
Thank you for speaking up. I have seen the same time and time again growing up. Yet people can’t believe it is true. Poverty is not just a lack of money.
Electronics, toys, clothes, food we wouldn't normally buy. Just stuff we wanted, even though the next month, a utility might get paid late. We didn't comprehend the concept of saving anything.
Thanks. I asked because I used to think people I knew were buying stupid shit, and at the same time a lot of my friends made fun of me for being a cheapskate.
When I was younger I managed to have a very low income for a while, but perhaps still (kind of) middle class sensibilities. I had college educated hippie parents, and was generally expected to succeed in some loose sense.
While I was wondering around on my own for several years getting fired from minimum wage jobs and such, I was sometimes surprised by how the people around me had different expectations and priorities then I did, and I think they were surprised by mine. (Actually, the interest in even talking about shit like this was one of those things that most people I knew mostly didn’t expect or share.) I was surprised when people I knew would settle for what I thought were bad deals they couldn’t afford like rentals, convenience food, pawn, or getting out of a jam with other expensive credit services.
So my friends made fun of me, and my girlfriend resented me because I wouldn’t buy a reasonable car, or a TV or cable, or a phone, for repairing things other people cast off, digging stuff out of the trash, and so on.
I felt like there was a real stigma attached to living within my pathetic means. Meanwhile, people seemed more worried about feeling or looking poor then actually being poor. It seemed like people with kids didn’t want them experience deprivation or stigma, and they especially tended to over-reach. In retrospect, I think I expected upward mobility, at least eventually, but the people around me didn’t.
> Definitely not calculated decisions to make progress to getting out of poverty.
Yes, that's one of the big problems. If you take someone from an environment where they're taught to make the right decisions and put them in a situation of poverty, they will often be able to make the right decisions and improve their situation. If you take someone that's never learned how to make the right decisions (or that there are even decisions to be made) there's little hope that they will do the right thing. That's what makes poverty a tough problem.
This right here - raised in a family of 6, was starvation poor at some points (eg. memories of not eating for days and throwing up when I got food - at like 5) and regular poor at others growing up. When my grandparents died mom inherited some land - enough to kick off a long term quality of life increase - sold off at a shitty price and spent in a year 'living like a tourist' - in my mother's words. Went back to being dirt poor and now me and my siblings need to support her.
Giving her small amounts of cash would have done nothing, it was just a mindset. She's a good person, the money she was spending on crap was largely for me and my siblings - but she can't handle money and has a very distorted view of how it works.
> Every time my family had any money, they bought stuff. Not stuff we needed, but stupid crap.
There has been research into why this happens. I don't remember the author I read but the gist of it is, poverty conditions a person never to think long term. You spend all your mental energy on immediate needs. Food for today. Rent for this week. Money is never around for long. You know next week is going to suck no matter what, so if you come into some extra money you spend it on something immediately gratifying. Not necessarily alcohol or drugs, but like you say, stupid crap -- something that provides some immediate entertainment or escape but has no other benefit.
>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.
Growing up my family did the same (waste money), but frankly, it didn't matter. It's not like a $300 check can do much to help a person, let alone a family, progress out of poverty. From my experience education is pretty much the only thing that works to move people out of poverty, and it is very expensive and exclusive.
It sounds circular to me: poverty itself incentivizes poverty. Are you less likely to grow up learning ambition, saving for a rainy day, and postponing gratification if your family grows up in poverty? I think the answer is, unquestionably, yes. You've gotten out of it by some combination of life experience that caused you to realize the bad choices, but also to have the ambition and imagination that better is possible.
I see poverty as kind of the backside of the power curve (various examples exist, I'll use airplanes): When an airplane is in slow flight on the backside of the power curve, drag is extremely high, and it takes a lot of power to get out of it, although merely just adding power doesn't guarantee you'll get out either. You need power and you have to change the flight profile (nose down a bit).
It's entirely possible UBI (and variant) trials in other countries where poverty is already low, will show higher efficacy than in the U.S. where poverty is higher and inherited, just like wealth.
> Every time my family had any money, they bought stuff
This is a pretty well-known phenomenon among people with unreliable income. Their default state is that they have no money, because they keep ending up there. So when there's a windfall, they don't think long-term, they just know it will be gone. So they spend it on something that provides immediate gratification.
I came from pretty dirt poor too, and saw this among my own family and friends for years.
was on HN recently. Seems to give some credence to the claim that those of us who are dealing with poverty, are conditioned to stay that way. As a child of someone from a poor family of 9, it always seemed like there were so many traps to overcome.
Yeah. I get pretty vocal in threads about poverty, and I'm a big fan of effective social programs intended to reduce poverty, but I have to agree with you (on the basis of personal experience) to some extent.
However, there's an entire class of politics around the notion that people are wealthy or poor only on the basis of their qualities as a person (and therefore social programs should be eliminated and people left to fend for themselves), and so people who are trying to experiment with effective social programs for the poor are quick to counter any arguments that imply that individual decision-making is a factor. (Myself included.)
> 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.
I've seen this repeated by most everyone who's been poor, including seeing my GF do that. There is a psychological difference in how people look at a windfall. I was always middle class, give me $10k and I'll stash it for 'later' because I assume there will be a later. Poor people think they'd better use now it before it 'disappears'
> Man, this type of program sounds patronizing.
This program is in a very literal sense patronizing. One of the definitions of that word is providing financial assistance to someone. Another one is treating someone with an air of superiority, which is the connotation I think you meant. These two things tend to go hand in hand though, that's why they use the same word. I have trouble seeing how we could have a UBI like system that wasn't patronizing though.
We already have a UBI like system that isn't patronizing in the USA - it's the Alaska petroleum funds distribution to all state residents.
changed link to cached since wired deleted original story
http://cc.bingj.com/cache.aspx?q=study+of+alaska+comparing+u...
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... 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.
In the context of brain psychology, short-term needs to be seconds to minutes. For example try to train a dog with rewards that come an hour later. It won't work.
In the example that I gave, you brush your teeth, your mouth feels better right away. That works.
By contrast if you start working on your project now, next week you won't have a miserable all-nighter. That doesn't work. Just ask anyone in college if you doubt me.
That is why a monthly feedback cycle did not prove to be successful motivation here.
I wonder though, isn't forgoing small short-term rewards for greater long-term rewards a key aspect of escaping poverty? How can you condition that behavior with short-term rewards?
That's a good question, and I don't have a good answer.
But well-off people that I know manage to forgo short-term rewards by having an internal counteracting short-term reward in line with the desired long-term reward. Maybe this is a teachable skill..?
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.
"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.
The actual problem here is giving someone $180/mo in one of the most expensive cities in the country is worthless. It failed to change anything simply because $180 isn’t ever going to change anything for someone who’s improverished and living in city where basic rent is 10x that amount.
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.
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.
Just because only 48% was paid directly to the family does not mean that these were the only costs to the program. For example, the program requires regular health checkups, so to make those accessible it likely either paid the total cost or most of the cost for those checkups as it's unlikely that the people using this program would be able to pay for them completely on their own.
With respect to the politics of implementing these programs, it's not simply the incentives created by the 48% that lead to a programs continued adoption, but the incentive created by the 52%.
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.
but the "cash" assistance was all about lowering costs. I get you've got costs of measuring the success rates etc, but I think the whole concepts needs to be rethought if they can't get that number much lower.
Most people underestimate the inefficiency of just about every government organization. Probably the only way to significantly improve the program's efficiency would be to turn it over to a for-profit company that had an incentive structure to distribute the cash properly but as efficiently as possible. So far I don't think that company exists yet. Pay for performance contracts get twisted by the contractors into a game to maximize the performance metrics while spending as little as possible. The problem is that it's really hard (some say impossible) to set up performance metrics that can't be gamed.
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.
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.
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).
You'll need a lot of citation for that. Also, Affirmative Action is decidedly not an anti-poverty program. It's an anti-bias program. And the comparison to China and India is apples and oranges. Aside from the fact that both countries have hundreds of millions of people in poverty, their success has been in industrializing agrarian societies. America is pretty far past that point. Our levels of absolute poverty (penury) are already near zero.
That's not really how it works, but I also didn't comment on it's effectiveness, just that it's not anti-poverty. If you're rich and a minority you get the same advantage. The test for eligibility isn't means-based. Hence, not anti-poverty. The intent is to get more minorities into colleges and into jobs. You can argue whether or not that's fair, but it probably works pretty well as intended.
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.
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.
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.
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.
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.
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.
> 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.
There is no way Buffet isn't aware of Goodhart's Law. He is smart. Are you sure you didn't misunderstand him somehow?
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.
Our societies are already so hopelessly rigged that it's hard to feel too upset about these rather tiny wealth transfers to people who need it, even if they didn't "earn" it.
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.
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.
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.
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.
tl;dr: Alasak oil royalty payments are more like UBI and less like CCT, so the incentive structure is a little different.
The Alaska oil royalties are not quite conditional cash transfer (CCT), since the only condition is that you lived in Alaska the entire year. They are much closer to universal basic income (UBI). Basically, since I don't have to comply with the forced requirements of a CCT, someone receiving a UBI is free to save it or spend it however they want. In Alaska that might mean that I'm more likely to go on a job hunt. I'm not exactly sure why, but not being forced to keep your kid in school and go to the doctor might be better in the long run.
CCT and UBI are quite different, although they might look the same at first glance. A UBI would give money to everyone, even the Koch brothers and Warren Buffet. CCT only targets poor people, but places restrictions on what you have to do to get the money.
With a CCT, you aren't free to spend your money however you want. You must first spend your money complying with the conditions or you stop getting the payments. If I'm only getting $150 per month, then most of the short term benefit is eaten up by going to doctor appointments and my kid's school.
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.
> 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.
> 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.
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.
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[ 6.1 ms ] story [ 244 ms ] thread> 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.
So where did the other 52% go to? Working costs of the program?
But this is hard to square away with this newest study's findings of modest adverse impacts on labor participation rates. This, combined with null health effects, suggests that the CCTs are performing an income substitution effect, and that what people are doing with their newfound free-time is probably leisure rather than other forms of 'work' (i.e. exercising, cooking healthier meals, etc.) that policymakers might wish the subjects undertake.
[0] https://www.povertyactionlab.org/sites/default/files/publica...
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."
Sure, but we're talking about things that most people would agree is good anyway: kids doing well in school, being healthy, etc. The goal of the CCTs isn't to make people want to do things that they vehemently disagree with: it's to shift the incentive boundary so that they're on the right side of it for things they would like to do anyway.
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'
While I'm sure it was nice to receive a _little_ extra money, that certainly isn't going to be life changing. It's more of a tease than anything.
One of the main ways in which redistribution programs are justified is by pointing out that a marginal dollar goes further for a poor person than a rich one. So I would hardly call this a "little" money, relative to baseline.
Having said that, one of the key advantages of unconditional cash transfers is that with much lower compliance/monitoring costs, a much higher percentage of all funds can go directly to the poor. GiveDirectly provides an 'imperfect estimate' of 81%, for the record https://www.givewell.org/charities/give-directly#CashRatios
9% of a tiny amount is also a tiny amount.
- Mostly cover the cost of operating a car
- Feed 2+ people (white rice is $34/month for 2400 calories/day; chicken is $60/month, whole milk is $80/month; mix and match to taste)
While $2k/year isn't a whole lot of money, it's marginal. If you're living at the edge of what you can afford, even a 9% bump can put you in a much more comfortable place.
But for poor people $100 a month is the difference between eating or not eating some days, or having the heating on or going cold, or buying some books for the kids to read at home, or paying the bills on time vs paying them late.
Also, about books: I don't know if there's something like this in the US, but it seems like a good idea: https://literacytrust.org.uk/support-us/help-child-fall-love...
A meaningful amount, like $400~$500 a month could make a much more considerable impact. $100/month means "Maybe we can take the kids to a movie one a month or have a nice dinner to help distract ourselves."
$500/month could mean, "We can get all those extra school supplies or put our kids in extra school programs."
Seeing if people would make those decisions would be an equally important study.
These current programs see more designed to encourage people to use free programs with a small monitary incentive. I probably says more about those programs than the impact of the money itself.
If the money is not significant enough to meaningfully impact that assessment then a short term distraction is a rational way to spend the money.
It's analogous but no the same as the prisoners dilemma with a known number of games.
A larger amount makes more sense in terms of being surer to have an impact. But it would make a widespread program based on those amounts so expensive that there’s probably no point in answering the question. Suppose it was found that giving poor families $20K annually did make a substantial difference? It probably wouldn’t matter because a large scale program based on that amount would probably never get funded.
Here, the question is if we give poor families a small (but not insignificant) amount of cash could that make a diffeeence? I guess the idea is that it might provide just enough to enable at least some of them to do something they would really like to do anyway but can’t quite manage.
Unfortunately, at least according to this, the answer is no. Perhaps we can think of it as a promising idea that didn’t pan out?
IDK, it sure would be nice if we could find a relatively cheap and straightforward solution to wide-spread poverty and inequality. Not exactly surprising that we haven’t, but it still seems worth continuing to try.
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.
Generally speaking, aren’t poor people poor because either they don’t know how to be not poor or can’t execute being not poor? Yes, sometimes it’s impossible to execute being rich, like if there is a systematic bias against a certain cohort. But cases like that aside, isn’t it pretty obvious that poor people either cannot or do not know how to not be poor?
Your perspective seems to suggest being poor just happens randomly to random people. But that’s not true. Being poor happens to people who fail to get and keep money from other people. Any time someone talks about patronizing poor people it’s like: yeah either we’re not going to talk about them being poor like that’s a bad thing, or we’re going to talk about it like it’s a bad thing and so maybe then we should figure out what they’re doing wrong when there are other people who are not poor.
Pretending like everyone’s economic actions are equal is insensitive to people who get and keep money and patronizing to people who don’t. Not all economic actions are equally good. Setting money on fire is not a good economic action. It is offensive to the person whose labor created that value. Yet I see poor people doing all kinds of offensive economic actions with money given to them by the state. I see people using benefits cards to buy groceries that I would never buy because they are so expensive or unnecessary. If you don’t want to be judged, don’t take money from other people, because that is literally patronage, which is patronizing.
Louis CK has a whole bit about this, back from when he was still broke: https://youtu.be/Y_-1l_SlA7c
I guess time has done him well :)
"Hey, don't buy the two pack. We'll buy you the 8 pack if you pay us $1/month for the next 5 months." Client saves $3. Charity gets >50% annualized ROR. Perpetual virtuous cycle that ends all poverty.
Why do you think no one's been able to pull off such a charity? Probably because the bottleneck isn't getting the initial capital, but being unable to stick to a plan even when it could pay off long-term.
It sounds like the program in the story is trying to close that gap and give more immediate rewards.
It turns out there are numerous charities designed to provide liquidity to poor people through microloans. Many of them are very effective.
(I was originally going to give a caveat about Kiva, etc.)
But you don't end up in endless poverty by making the right decisions. The United States can be a pretty brutal place, but comparing to human history it's actually incredibly forgiving and full of opportunity.
There is also plenty of research that shows that poverty is detrimental to mental health in a way that reinforces poverty. The insecurity from not knowing where your next meal will come from or not knowing were to sleep is a direct cause of poor decision making.
Also the #1 reason people go into bankruptcy in this country is medical costs. That's not something that can be "executed".
Getting wiped out by a medical event means you didn’t have health insurance. Health insurance is generally affordable despite what the GOP says, especially if you’re in poverty then you can get some really good Obamacare for free. Not buying insurance is just about the poorest thing you can do. Yes, before the ACA there was the the whole preexisting condition thing. There’s all kind of whack ass stuff out there. But I’m not talking about corner cases. I’m talking big picture. Step one to not being poor is having insurance.
The sins of the father...
> It’s not random
But people cannot choose where, when, or to whom they are born.
It's funny your parents actions shouldn't dictate if you're poor, but God forbid your parents were rich: no one likes a rich kid.
> But people cannot choose where, when, or to whom they are born.
Life is not fair. It just isn't...
Unless you're in one of the many states that didn't expand medicaid coverage. Then you need to make above the poverty line to qualify for subsidies.
>Health insurance is generally affordable despite what the GOP says
Now that the GOP has revoked the individual mandate, the prices are going to keep going up for people on the exchange.
My Brother and his wife get coverage from the exchange and their cheapest plan went up 50%. Average out of pocket (after subsidy) insurance rates went up around the country this year, and they are expected to go up again next year.
No. Generally speaking, people are poor because their parents were poor and because they are in a system which works to make and keep them poor.
I hear people make claims like this frequently and I always wonder if it could possibly be true. I can't remember the last time I paid any attention whatsoever to what other people were buying in the grocery store, much less their mode of payment. This sounds more like the repetition of a certain strain of conservative mythology (with a strong family resemblance to the infamously fictional "welfare queen") than actual anecdote.
And if it is true: 1) Maybe consider giving your fellow shoppers a little privacy. And 2) I wonder: exactly what groceries are we talking about here that you can be so sure another person, whose life and preferences you know nothing about, is making not just a mistake, but being "economically offensive" by buying them? Voss bottled water is about the only thing I can think of that might fit the bill here.
I'd happily give all the crack addicts assistance if it meant no children missed any meals.
How about we don't conflate the two issues?
People who have so little money they can't afford food, should get assistance. Full stop.
Crack addicts who are so poor to require that same assistance probably need drug counseling and possible mental health assistance. In addition to the money for food.
If you think throwing it on a card or whatever will stop the addicts from buying drugs - you're mistaken.
Maybe we shouldn't treat people who are suffering as if they deserve their conditions. Maybe we should have more compassion for them, than we do for the corrupt wall street bankers who got massive bailouts in 2008.
What they do need is drug counseling, psychiatric counseling, a safe place to stay, food provided for them, clothing, help finding a job and stable housing arrangement after they are sober. Giving a cocaine addict that is so poor they are living on the streets just cash, is unhelpful. Once they are sober and have proven they will responsibly use money for needed items, then you can give it to them.
As a physician who sees plenty of county patients that are addicts - you know what happens when they get a bunch of money? They spend it on drugs, not on their neglected children or anything else in Maslow's hierarchy. Do-gooders who think handing cash to an addict is helpful, are wrong. You're just wrong and I completely disagree with you, I'm not conflating anything.
That sounds like conflating the issue of poverty with the issue of drug abuse. There is overlap, but I don't believe that the harm to addicts outweighs the help to the people struggling to survive.
There is another way to view this. We might think of these programs as encouraging people to do things that society needs, instead of what they need. Then the payment is there to offset the personal cost.
Note. I've thought about this for all of 10 seconds. I might be 'way off.
Even if 50% of recipients go buy drugs with the money, does it really matter? It probably costs more to enforce these conditions than the percent of funding that would go to drugs. It also creates bureaucratic overhead at the point of distribution.
Further, it’s unlikely enforcing criteria even filters out more drug users than non-restricted payouts do. These criteria are unlikey to be mutually exclusive with drug use. Someone can take drugs and also check all the boxes to meet the “criteria.” Given this consideration, it is clear that attaching conditions to a payout contributes little to no marginal gain in savings or efficency of individual outcomes.
But as other comments note, the conditions themselves are beneficial to both the recipient and those around them. If one person gets preventive healthcare who would not have otherwise, isn’t that a good outcome? Is it a better outcome than if one drug user does not seek or get access to disbursements?
Perhaps a better solution would create tiered payouts that get higher the more conditions you meet. The lowest payout would have no strings attached, but higher payouts would be available to those who fulfill certain criteria.
> Even if 50% of recipients go buy drugs with the money, does it really matter?
The libertarian dream, however the unfortunate reality is that where the money is supposed to do things like feed your children, you instead squander it on drugs. If the presumption of drugs is too harsh, replace it with something equally stupid like cigarettes, lottery tickets, rent-to-own furniture or some other predatory service that the poor disproportionately participate in. This is not a behavior beneficial to anybody or worth enabling.
This is why we have systems like food stamps (disbursements that can only be spent on food), WIC (disbursements that can only be spent on fresh vegetables, baby food/formula, etc) and so on. Handing cash to people who don't know how to use it responsibly does not spontaneously teach them otherwise.
Yes--I know regulations are not liked.
Rent-to-own is basically extorsion.
My biggest gripe is the payday loan type companies.
Oh yea, federally insured banks should be required to cash checks, without a consumer being a customer.
We have so many laws/regulations that protect businesses; While the poor have the BBC. This is not the America I put my hand over my heart as a kid. I ashamed at what we have become.
People use payday loans because nobody else lends them money. If you want to help them, offer them loans with better conditions, and you'll see most of those payday shops go out of business.
Willpower, knowledge, and just plain old wherewithal aren't free and can't just be assumed.
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?
You're refuting an anecdotal example with an unsubstantiated claim.
That’s a huge statement. How would you back that up? “Most” people? Who? When? Why?
The only reason the counterargument is slightly more palatable is because it conforms to Occam's Razor.
> because they consciously and continuously choose to be poor is ridiculous on its face
This is a blatant straw man. We are saying they don't make wise choices for a myriad of reasons, not that they intentionally choose to be poor.
Edit:
If you make bad choices in life the end result will be poverty. That doesn't mean you chose poverty consciously.
You can also make good choices and end up poor. A great example of this is anyone who got a law degree before the recession.
Totally. And then dismissing something as "ridiculous on its face" without following up as to why? :(
We would have gone from poor five year olds to wealthy 30 year olds by force of will.
We would have had the energy and resources and parental support to source our food, health, shelter, and education for our first 18 years because we make such great decisions.
Or: we believe we _are_ good because we _have_ it good.
Tell me again about Occam?
No, I'm not going to sit here and let you tell me I didn't make good choices and work hard to get where I'm at.
I paid my own way through college by working nights, got my first job in I.T. by repairing thrift-store computers and selling them on eBay, and chose to work hard in school because I knew it was important.
My parent's money didn't make a difference, what did make a difference was the lessons they taught me, and the interest they took in my education.
> We would have had the energy and resources and parental support to source our food, health, shelter, and education for our first 18 years because we make such great decisions.
There are almost no children in America who don't have access to food, shelter, and education. The only thing you are right about is parental support, but not in regard to food/shelter, what most kids don't have in America are parents who force them to focus on education and financial responsibility.
If you wan't to succeed in America, there are limitless options, most of which are extremely hard. That's the real problem. I didn't get to where I'm at because of my parents. I got there because I worked 60 hour weeks, and studied subjects I cared nothing about, but knew would benefit me in the long run. It was fairly hard, but completely doable.
I'm willing to make the assertion that anyone, regardless of their background or parental support, can go to community college, work to pay their way through, get a reasonable degree, and move into the middle class within 10 years.
Edit:
Forgot to address your other points.
> Sure. All of us here would have made the correct hundred thousand or so choices and avoided the enormous number of traps and inherent dangers of poverty.
If you don't make the right choices, it's your fault. It's unfortunate, but it's still your fault.
> We would have gone from poor five year olds to wealthy 30 year olds by force of will.
Yes, this is a perfectly reasonable expectation.
I disagree, although I can't really give anything more than the same anecdotal evidence that's already been given. Both of my parents grew up only slightly above the poverty line. It was entirely because of choices their parents made. They didn't make the same mistakes, and are now both well positioned in the middle class. How? Essentially, they both just put themselves through school. That's all it really took. A few loans, and a fast food job on the side, got them the education they needed to break the poverty cycle.
I think the truth is neither of us have enough real evidence to be making the assertions we are making. For every anecdotal case you find of someone stuck in poverty, I guarantee I can find a case of someone who made a few simple choices and got out of poverty. What we really need are more studies like this that produce empirical data on the subject. Then we can start to argue whether poverty is a choice or a social class people are forced into.
When I was younger I managed to have a very low income for a while, but perhaps still (kind of) middle class sensibilities. I had college educated hippie parents, and was generally expected to succeed in some loose sense.
While I was wondering around on my own for several years getting fired from minimum wage jobs and such, I was sometimes surprised by how the people around me had different expectations and priorities then I did, and I think they were surprised by mine. (Actually, the interest in even talking about shit like this was one of those things that most people I knew mostly didn’t expect or share.) I was surprised when people I knew would settle for what I thought were bad deals they couldn’t afford like rentals, convenience food, pawn, or getting out of a jam with other expensive credit services.
So my friends made fun of me, and my girlfriend resented me because I wouldn’t buy a reasonable car, or a TV or cable, or a phone, for repairing things other people cast off, digging stuff out of the trash, and so on.
I felt like there was a real stigma attached to living within my pathetic means. Meanwhile, people seemed more worried about feeling or looking poor then actually being poor. It seemed like people with kids didn’t want them experience deprivation or stigma, and they especially tended to over-reach. In retrospect, I think I expected upward mobility, at least eventually, but the people around me didn’t.
Yes, that's one of the big problems. If you take someone from an environment where they're taught to make the right decisions and put them in a situation of poverty, they will often be able to make the right decisions and improve their situation. If you take someone that's never learned how to make the right decisions (or that there are even decisions to be made) there's little hope that they will do the right thing. That's what makes poverty a tough problem.
Giving her small amounts of cash would have done nothing, it was just a mindset. She's a good person, the money she was spending on crap was largely for me and my siblings - but she can't handle money and has a very distorted view of how it works.
There has been research into why this happens. I don't remember the author I read but the gist of it is, poverty conditions a person never to think long term. You spend all your mental energy on immediate needs. Food for today. Rent for this week. Money is never around for long. You know next week is going to suck no matter what, so if you come into some extra money you spend it on something immediately gratifying. Not necessarily alcohol or drugs, but like you say, stupid crap -- something that provides some immediate entertainment or escape but has no other benefit.
Growing up my family did the same (waste money), but frankly, it didn't matter. It's not like a $300 check can do much to help a person, let alone a family, progress out of poverty. From my experience education is pretty much the only thing that works to move people out of poverty, and it is very expensive and exclusive.
I see poverty as kind of the backside of the power curve (various examples exist, I'll use airplanes): When an airplane is in slow flight on the backside of the power curve, drag is extremely high, and it takes a lot of power to get out of it, although merely just adding power doesn't guarantee you'll get out either. You need power and you have to change the flight profile (nose down a bit).
It's entirely possible UBI (and variant) trials in other countries where poverty is already low, will show higher efficacy than in the U.S. where poverty is higher and inherited, just like wealth.
This is a pretty well-known phenomenon among people with unreliable income. Their default state is that they have no money, because they keep ending up there. So when there's a windfall, they don't think long-term, they just know it will be gone. So they spend it on something that provides immediate gratification.
I came from pretty dirt poor too, and saw this among my own family and friends for years.
https://www.si.com/vault/2009/03/23/105789480/how-and-why-at...
was on HN recently. Seems to give some credence to the claim that those of us who are dealing with poverty, are conditioned to stay that way. As a child of someone from a poor family of 9, it always seemed like there were so many traps to overcome.
It has to be a massive societal commitment.
It's a bit more complicated than just "poor people make bad decisions"; there are confounding factors in mental health (https://www.nature.com/news/poverty-linked-to-epigenetic-cha...), relative education, and human psychology (https://www.theatlantic.com/business/archive/2013/11/your-br...).
However, there's an entire class of politics around the notion that people are wealthy or poor only on the basis of their qualities as a person (and therefore social programs should be eliminated and people left to fend for themselves), and so people who are trying to experiment with effective social programs for the poor are quick to counter any arguments that imply that individual decision-making is a factor. (Myself included.)
I've seen this repeated by most everyone who's been poor, including seeing my GF do that. There is a psychological difference in how people look at a windfall. I was always middle class, give me $10k and I'll stash it for 'later' because I assume there will be a later. Poor people think they'd better use now it before it 'disappears'
https://buildingpharmabrands.com/2013/05/27/the-ad-that-crea... 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...)
In the example that I gave, you brush your teeth, your mouth feels better right away. That works.
By contrast if you start working on your project now, next week you won't have a miserable all-nighter. That doesn't work. Just ask anyone in college if you doubt me.
That is why a monthly feedback cycle did not prove to be successful motivation here.
I wonder though, isn't forgoing small short-term rewards for greater long-term rewards a key aspect of escaping poverty? How can you condition that behavior with short-term rewards?
But well-off people that I know manage to forgo short-term rewards by having an internal counteracting short-term reward in line with the desired long-term reward. Maybe this is a teachable skill..?
https://tomprof.stanford.edu/posting/1182
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.
https://xkcd.com/1831/
...except in this case, poverty has been around for 1000s of years unsolved.
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...
So the best we can do is 48% efficiency?
With respect to the politics of implementing these programs, it's not simply the incentives created by the 48% that lead to a programs continued adoption, but the incentive created by the 52%.
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
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.
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.
Maybe it works as intended as long as you're trying to maximize enrollment in "any colleges", not "best colleges".
https://news.ycombinator.com/item?id=16402648
https://news.ycombinator.com/item?id=16402618
https://news.ycombinator.com/item?id=16185062
... and plenty more at https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme... for anyone who wants it.
Would you please (re-)read the site rules at https://news.ycombinator.com/newsguidelines.html and use HN as intended—that means for intellectual curiosity—from now on?
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.
It's still silly that the participants had to pay for them in the study.
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.
Can you give some examples?
The parts of the world where poverty is still high are those where science and technology have not yet arrived.
The basic problem is the politicians work for the owners and the poor are not owners of anything.
There is no way Buffet isn't aware of Goodhart's Law. He is smart. Are you sure you didn't misunderstand him somehow?
At the end of the day, its just other people paying for someone else to get free stuff.
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.
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.
The Alaska oil royalties are not quite conditional cash transfer (CCT), since the only condition is that you lived in Alaska the entire year. They are much closer to universal basic income (UBI). Basically, since I don't have to comply with the forced requirements of a CCT, someone receiving a UBI is free to save it or spend it however they want. In Alaska that might mean that I'm more likely to go on a job hunt. I'm not exactly sure why, but not being forced to keep your kid in school and go to the doctor might be better in the long run.
CCT and UBI are quite different, although they might look the same at first glance. A UBI would give money to everyone, even the Koch brothers and Warren Buffet. CCT only targets poor people, but places restrictions on what you have to do to get the money.
With a CCT, you aren't free to spend your money however you want. You must first spend your money complying with the conditions or you stop getting the payments. If I'm only getting $150 per month, then most of the short term benefit is eaten up by going to doctor appointments and my kid's school.
[0] 'Promises and perils of pre-analysis plans', Ben Olken, https://economics.mit.edu/files/10654
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.
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.