Do the right things

An interesting, in-depth article in the Financial Times about the Opportunity NYC program, which pays welfare recipients up to $5,000/year for doing various things that will help them escape poverty.  There are some parallels with the REACH program:

The New York programme is small: only 2,500 families, chosen from six impoverished neighbourhoods including Harlem and parts of Brooklyn and the Bronx, are participating. The performance of these families - whose household incomes may fall well below the federal poverty level or as much as 30 per cent above it - will be measured against a control group of 2,500. Gibbs's team identified 60 behaviours it would reward with cash, from a $25 payment to be made when parents attend meetings with teachers to $600 for students who perform well in important exams. In all, a family can earn up to $5,000 a year, with big rewards for taking health tests and working for at least 30 hours a week.

Although the details may be different from those in the developing world, the goal is the same: to encourage behaviours that will help break cycles of entrenched poverty. Americans with a high-school diploma cut their chance of living in poverty by half. In New York, the graduation rate has been rising - but only about half of students graduate on time.

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Do the right things

By Christopher Grimes, Financial Times, 5/24/08

www.ft.com/cms/s/0/a2f1b24a-292a-11dd-96ce-000077b07658.html

On a bright, cold March afternoon, the sidewalks of East New York are bustling with mothers leading their children home from school. A pair of New York City beat cops stand outside a dingy pizzeria, giving them a view of the public housing projects across Sutter Avenue. In the distance, a silver train catches the brilliant sunshine as it hurtles away on elevated tracks, bound for Manhattan, 15 stops away.

The sense of orderly urban bustle is reassuring to the first-time visitor to this Brooklyn neighbourhood with an enduring reputation as one of New York's toughest. Poverty here is deep and difficult to escape. A handful of people, such as Goldman Sachs chief executive Lloyd Blankfein, have managed to leave its housing projects behind - but many more cannot. The past decade's dizzying gentrification of many of New York City's once-rough neighbourhoods - from 125th Street in Harlem to the old piers of Brooklyn's Red Hook - has passed E.N.Y. by.

And yet over the past year, this place has become the setting for one of the most closely watched anti-poverty programmes in the developed world. The idea, which has the support of New York mayor Michael Bloomberg (but is not yet city policy), is as simple as it is controversial. Nearly 500 families here, and 2,000 more in other poor neighbourhoods in the city, are being paid "conditional cash transfers" for performing tasks that might help them escape poverty. Children are paid for good school attendance and improving test scores. Parents are paid bonuses for working at least 30 hours a week, taking job training courses or taking their children to see the doctor. Payments that encourage people to invest in their future wellbeing have been used successfully in developing countries from Mexico to Turkey. But the method has never been employed to fight entrenched poverty in a rich country. Many doubt that it will work.