Disappointing Findings on Anti-Poverty Cash Transfers in the USA

So where did the other 52% go to? Working costs of the program?

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."

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

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.

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.

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.

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...

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.

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".

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.

> 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, 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.

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'