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NYC poor to get cash for good behavior

2007-06-20 07:58:43

By SARA KUGLER, Associated Press Writer Tue Jun 19, 12:39 AM ET

NEW YORK - Poor residents will be rewarded for good behavior like $300 for doing well on school tests, $150 for holding a job and $200 for visiting the doctor under an experimental anti-poverty program that city officials detailed Monday.

The rewards have been used in other countries, including Brazil and Mexico, and have drawn widespread praise for changing behavior among the poor. Mayor Michael Bloomberg traveled to Mexico this spring to study the healthy lifestyle payments, also known as conditional cash transfers.

In New York, the two-year pilot program with about 14,000 participants will use private funds Bloomberg has raised because he did not want to spend government money on something that is highly experimental. More than $43 million has been raised toward the $53 million goal, Deputy Mayor Linda Gibbs said.

The theory behind cash rewards is that poor people are trapped in a cycle of repeated setbacks that keep them from climbing out of poverty. A person who doesn't keep up with his vaccinations and doctor's visits, for example, may get sick more often and struggle to stay employed.

Bloomberg, a billionaire Republican, said he believes paying people in such circumstances to make good decisions could help break those patterns. The program "gives New Yorkers in poverty a financial incentive to look ahead and make decisions that will improve their prospects for the future," he said in a statement.

But some critics have raised questions about cash reward programs, saying they promote the misguided idea that poor people could be successful if they just made better choices.

"It just reinforces the impression that if everybody would just work hard enough and change their personal behavior we could solve poverty in this country, and that's not reflected in the facts," said Margy Waller, co-founder of Inclusion, a research and policy group in Washington.

Waller, who served as a domestic policy adviser in the Clinton administration, said it would be more effective to focus on labor issues, such as making sure wage laws are enforced and improving benefits for working people.

Among the possible rewards in New York's program are $25 for attending parent-teacher conferences, $25 per month for a child who maintains a 95 percent school attendance record, $400 for graduating high school, $100 for each family member who sees the dentist every six months and $150 a month for adults who work full time.

The

World Bank model for cash reward programs in other countries is that the value of the incentive should equal about a third of a household's income to have any lasting influence on changing behavior. The average amount that a family or adult can earn through the rewards each year is about $3,000 to $6,000; a family of three living in poverty earns about $17,000 a year.

Recipients, who are being selected this summer before the program begins in the fall, will be able to have the money deposited directly into their bank accounts. If they don't have accounts, they can get cards that are like debit cards but cannot be overdrawn.

The city is asking the federal government to excuse the payments from being taxed. Participants will be divided into three smaller programs that have different criteria and awards: one for about 2,550 families, one for 2,400 single adults and another for 9,000 children in grades 4 to 7.

To measure the effectiveness of the rewards, control groups of similar size will not be paid but will be studied by participating in regular surveys and reviews from an outside social policy research group, Gibbs said. The control participants will receive small incentives, such as weekly MetroCards for paying bus and subway fares, for their time and trouble.