Bloomberg . . . pretended that New York’s underclass faced similar tragic choices. The poor failed to “plan for the future” because they were “so focused on surviving,” They were engaged in a “struggle” for the very basics of existence, he said. Opportunity NYC–Family Rewards would alleviate the immediate pressure for survival that allegedly prevented the inner-city poor from investing in their future by paying them for self-improving behavior, thus offsetting the purported opportunity cost of future-oriented actions.
Of course, it’s ludicrous to suppose that what keeps America’s inner-city residents poor across generations is a struggle for subsistence in an economy of limited opportunities. The main drivers of poverty in America are family breakdown (in 2004, single-parent households nationally were six times as likely to be poor as married families) and nonwork (only 5 percent of all families with one full-time worker were poor in New York City from 2005 to 2007, compared with 47 percent of families with no workers). The antisocial behaviors that contribute to multigenerational poverty also have nothing to do with suffocating economic pressures: very few inner-city students cut classes or drop out of school to help their parents work; they do so because their peer culture is toxic and because their parents exercise little control over their lives. . .
But the program’s proposed cure is potentially worse than the disease: paying families for activities that are part of the normal repertoire of what it means to be a responsible parent or student. (These payments are known as conditional cash transfers, or CCTs.) Randomly selected low-income parents of elementary- and middle-school students in Brooklyn, the Bronx, and Manhattan are paid $25 each month that their child has a 95 percent school attendance record; high school students with a low-income parent in the program receive $50 a month for a similar attendance rate. Elementary- and middle-school students who make progress on annual academic tests net their parents $300 and $350, respectively. High school students get $600 each year that they accumulate 11 course credits (the bare minimum to stay on track to graduate) and another $600 for each New York State Regents exam that they pass. Parents are paid $25 for attending a parent-teacher conference or discussing their child’s test results with a teacher; they receive $50 for getting their child a library card. Taking advantage of taxpayer-subsidized Medicaid services, such as free medical checkups, brings a $200 annual windfall; simply maintaining free Medicaid insurance earns the recipient $20 a month. Working full-time earns an additional $150 a month beyond the existing salary. Seeking education and training while working at least ten hours a week could net a parent $3,000 over three years.The hubris behind this menu of bribes is breathtaking. Working on the premise that American society didn’t sufficiently reward self-discipline, effort, and achievement, the Family Rewards architects decided that they needed to correct the inadequate signals that the economy and the culture sent to the poor. . .
The problem is that the poor don’t respond to incentives that are already abundantly present. Nevertheless, convinced of their own superior capacities to engineer sound social signals, the program’s planners arbitrarily made up a schedule of payments that would induce a welfare mother, for example, to make sure that her child went to school every day. Is monthly school attendance worth $25 or $100? Is a single Regents exam worth $600 or $1,200? Ordinarily, markets set prices for true economic exchanges. These were pseudo-economic transactions, however—a fake superstructure imposed on top of noneconomic moral obligations and behaviors that ordinarily bring their own intrinsic reward. Pricing such obligations required a bunch of elite professionals to try to imagine how many shiny baubles they needed to dangle in front of the poor to get them to rouse themselves, a creepy Skinnerian activity demeaning to both the social technicians and their subjects. . .
Society would become divided between a caste that acted responsibly because it understood that it was the right thing to do and another caste that got paid by the responsible caste to follow social norms. . .
the Bloomberg experiment had almost no effect on its participants’ behavior. . .
Two possible policy conclusions follow from the hypothesis that social and cognitive disorganization prevented participants from exploiting the reward structure. The first is: Do nothing. If paying a mother to take her nine-year-old to school every day induces no behavior change in her, it may be time to give up the notion that government programs can erase social and economic stratification. There is a substratum at the bottom of society that will never be raised up by outside intervention. “The premise of conditional cash transfers is that the stresses of poverty cause people to make choices that are not in their long-term interest,” MDRC president Gordon Berlin said at the press conference announcing the interim results. He may have it backward. It is the inability of some people to make choices in their long-term interest that causes poverty, as sociologist Edward Banfield argued four decades ago in The Unheavenly City. The poor have short time horizons, Banfield wrote, the rich, very long ones. No external force can change those psychological dispositions.One of the few social scientists to have anticipated the results of Opportunity NYC–Family Rewards offers an alternative policy implication. New York University politics professor Larry Mead predicted that the program would have little effect on participants’ behavior. “If the poor were as responsive to [financial] incentives as the policy assumes, they wouldn’t be poor for very long in the first place,” Mead wrote in an e-mail in 2007. If the program had worked, Mead now says, it would have confirmed the notion that the poor are just like us: they respond rationally to opportunity. Instead, the results buttress the message of welfare reform: the poor need strong paternalism and clear moral guidance. Welfare mothers started working not because it was for the first time in their economic interest to do so, but because welfare bureaucrats made it clear that they were expected to work, according to Mead.
Family Rewards has cost $33.8 million so far.