The War on Poverty: Steinhardt Faculty Study Conditional Cash Transfers in the US

Despite declaring war on poverty in the 1960s, the United States has one of the highest poverty rates among industrialized countries. In 2009, one in five children lived in poverty. Research shows the negative effects of poverty, especially on children’s health, learning, and development.

Lawrence Aber, Steinhardt’s distinguished professor of applied psychology and public policy, likens the current research on poverty to “earlier research on the effects of smoking.”

“We now know for certain what most of us always suspected: poverty is bad for children’s development and the nation’s well-being,” Aber says.

A number of federal programs, such as Temporary Assistance for Needy Families and the Earned Income Tax Credit, have been designed to alleviate poverty and its effects; yet, poverty remains a harsh reality for too many adults and children in America.

Improving the Social Safety Net

Aber is among the faculty across Steinhardt who studies new approaches to improve the social safety net and move more families out of poverty once and for all. A longtime advocate of building an evidence-base for policies that reduce child poverty, Aber was instrumental in helping New York City Mayor Michael R. Bloomberg’s Center for Economic Opportunity design a pilot study of an antipoverty program for families in some of the city’s poorest neighborhoods, as a member of a Commission formed to reduce poverty and increase economic opportunity in New York City.

The pilot program, Opportunity NYC-Family Rewards, was the first conditional cash transfer (CCT) program ever attempted in the United States. Unlike traditional welfare programs, CCTs give money to poor families for completing certain goals, such as enrolling children in school and making doctors’ visits. Aber explains, “We use financial incentives in every other segment of society. Tax breaks for the wealthy, tax breaks on mortgages for the middle class. Why exclude the poor?” Aber has worked with the City to study the impact of such an approach on its poorest families.

Family Rewards and Human Capital

Modeled on a successful CCT in Mexico, a privately-funded study of Opportunity NYC-Family Rewards was undertaken with 4,800 poor families across New York City from 2007-2010. The goal of the study was not only to help reduce current poverty, but also improve participants’ human capital in the areas of education, health, and employment. MDRC, a nonprofit policy research firm, has been conducting the core evaluation of this program. Aber and his colleague, applied psychology professor Pamela Morris, worked closely with the Center for Economic Opportunity and with MDRC to secure additional funding to supplement the larger evaluation with information about the program’s effects on the youth and their families.

Early findings from MDRC’s core study found that the program reduced levels of current poverty among treatment families. It had few effects on the school outcomes of elementary and middle school children, but encouraging effects among better-prepared high school students.

While the pilot program has ended, the research continues. The William T. Grant and Smith Richardson Foundations have funded Aber and Morris and their colleague, James Riccio at MDRC, to more fully capture the effects of the cash transfers on the students enrolled in the program. Known as an “embedded study,” their evaluation will capture information from the children themselves as well as further information from families. Through surveys Aber and Morris will look at how the offer of incentives affect key family processes and children’s attitudes and behaviors that are expected to, in turn, affect the school outcomes targeted by this intervention. In this way, they hope to uncover effects of the program not captured in the MDRC core study and test some of the theories behind the model.

Will Money in the Bank Mean Investing in Education?

The researchers will be looking to see how the extra income earned by Family Rewards participants influences the family climate and daily activities.

“We’re collecting information about how these students are spending their money, spending their time, and what their motivations are,” says Morris. “We’re interested in whether they’re studying more, engaging more deeply in school, aspiring to college, and whether they are saving their money. The research will give us a much fuller picture. Our expectation is that there may be effects beyond what we’ve seen so far.”

Aber and Morris hope to continue their research among this cohort of Family Rewards recipients over the long term. Their findings will likely influence policymakers as they seek to refine and rethink the use of the CCT model in the United States.

Findings from this study will be used to inform ongoing work on CCTs as well as policy interest in implementing CCTs as a response to poverty. As Aber says, “This is the first test of this policy approach in a high-income country. As such, there is tremendous policy and academic interest in the results of this study.”

A report on the findings from this embedded study will be released in late 2011.