BRIBERY STRIKES OUT: Opportunity NYC’s Family Rewards Program stops paying for good behavior

Can government bribe people into certain behaviors? The somewhat under-the-radar failure of Opportunity NYC two weeks ago is an interesting case study.

From the New York Times:

City Will Stop Paying the Poor for Good Behavior
Published: March 30, 2010
An unusual and much-heralded program that gave poor families cash to encourage good behavior and self-sufficiency has so far had only modest effects on their lives and economic situation, according to an analysis the Bloomberg administration released on Tuesday.

The three-year-old pilot project, the first of its kind in the country, gave parents payments for things like going to the dentist ($100) or holding down a full-time job ($150 per month). Children were rewarded for attending school regularly ($25 to $50 per month) or passing a high school Regents exam ($600).

When the mayor announced the program, he said it would begin with private money and, if it worked, could be transformed into an ambitious permanent government program.

But city officials said Tuesday that there were no specific plans at this time to go forward with a publicly financed version of the program. In an announcement at BronxWorks, a nonprofit social services agency, Mayor Michael R. Bloomberg pointed to a few examples of success: High school students who met basic proficiency standards before high school tended to increase their attendance, receive more class credits and perform better on standardized tests; more families went to the dentist for regular checkups.

But the elementary and middle school students who participated made no educational or attendance gains. Neither did high school students who performed below basic proficiency standards before high school.

As a conservative-libertarian, I saw some dangers in the government paying (or penalizing) for certain behaviors. Where would it stop? Would government pay/penalize you for eating certain foods, for watching certain television shows, for taking shorter showers, for heating your house less, etc.?

Suppose the government was wrong about you? Suppose you got paid to consume less salt, and it made you feel sick? Suppose government discouraged another young LeBron James from playing basketball, or a young Bill Gates from fiddling with computers, or another Vladimir Horowitz from playing the piano? The government pays/penalizes us to all be the same, but we’re not all the same.

The Associated Press headline here says it all:

Report: Money for good habits doesn’t change lives
By SARA KUGLER (AP) – Mar 31, 2010

NEW YORK — An experimental anti-poverty program that pays the poor for maintaining good habits — $25 to $150 for things such as going to the dentist, staying on the job or opening a bank account — has not been life-changing.

The cash incentives funded with private donations have helped some New Yorkers make better choices, but it has not encouraged young people to do better in school or adults to keep a job. And Mayor Michael Bloomberg said the incentives are not the answer to eradicating poverty.

Heather MacDonald used to be my regular read in the New York Sun/New York Post, and she explains it simply in the City Journal:

Heather Mac Donald
Bribery Strikes Out
It isn’t lack of opportunity that keeps poor people poor.
8 April 2010
A welfare mother in Central Harlem is not poor for the same reasons that a subsistence corn farmer in Mexico is poor. That’s just one of the many self-evident conclusions to emerge from a dangerously misguided antipoverty program begun by New York City Mayor Michael Bloomberg in 2007. Bloomberg’s initiative, Opportunity NYC–Family Rewards, bestows cash rewards on (for the most part) single parents and their children if they act responsibly—by attending school, for example, or by working. Interim results for New York’s effort, which is modeled on a program in Mexico that targeted agricultural peasants, are now in. Not all of them are as blindingly obvious, though, as the fact that multigenerational urban poverty in America is far different from Third World rural poverty. One detail in particular stands out: that the lives of America’s underclass are characterized by a degree of disorganization that is rarely grasped or acknowledged. The implications of this revelation will be difficult, if not impossible, for the welfare industry to accept.
Nor does American poverty bear any resemblance to Third World poverty. New York City is awash in welfare programs that confer on the poor benefits that would be unthinkable in rural Mexico or Africa, such as free high-tech medical care, monthly welfare checks, and free or subsidized housing. Family Rewards is an add-on to an already generous safety net; the Mexican version is the safety net. New York’s poor also enjoy a clean, reliable water supply, a public health system that controls environmentally borne infectious disease, a sound transportation infrastructure, and the rule of law. The city’s officially classified “poor” teenagers can be regularly observed sporting the latest designer sneakers.

A good point. New York City’s poor have many programs, and this was just one of many.

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.

Liberals have hubris?

The danger with the conditional cash transfers was always that they would work. (…) Poor children would make an effort in school not because their parents had instilled in them the importance of education but because of the expectation of immediate cash. Once word got out that some students in a school were getting paid for their study habits, trying to withhold payments from every child in that school or indeed from every school in the system would be nearly impossible.

Good point.

A series of studies since 1971 have shown that once artificial incentives for what should be self-motivated actions are curtailed, the desired behavior shuts down. Third-graders who were given prizes like toys and candy for reading books did not sustain their reading activity once the prizes stopped coming, according to a 2008 study; many stopped reading entirely.

No more bribes for us?

The program had no effect on students’ attendance rates compared with those of students in the control group; it had no effect on average test scores or academic proficiency rates; it had no effect on high school students’ overall accumulation of course credits or successfully passed Regents exams; it had only a negligible effect on the rate at which parents sought a free annual checkup for themselves or their children compared with parents in the control group; and it had a negative effect on the rate at which parents sought education or training for themselves.

The Family Rewards Program was a failure.

The city has been promoting its experiment worldwide; the Obama administration has been watching the initiative as a possible basis for future antipoverty programs.

Of course Obama was watching. The $40-50 million program was partly funded by George Soros‘s Open Society Institute.

From the Bergen Record:

Ahearn: Paying poor people to do the right thing
Wednesday, April 14, 2010
It sounds like a plan dreamed up in the East Village back in the Seventies, in a haze of marijuana smoke. But Bloomberg was not alone. Joining him in this enterprise were George Soros and Maurice Greenberg, both, like Bloomberg, hard-headed, successful businessmen.
And, now that the three-year mark has been reached, what are the results? Pretty meager.
When Bloomberg announced the experiment, he said that if it worked, it could be expanded into a major, permanent government program. Well, that isn’t going to happen, he acknowledges.

No new major, permanent government program? Under Obama? Is this a miracle?

From the blog DevPolitics:

March 31, 2010
Also, I was alarmed to learn that approximately 60% of funds go towards research and overhead costs rather than direct service fees. It is shocking that less than half of the funds are used for the intended program directly. I wonder if greater efficiency could be achieved by a review and reallocation for finances.
Posted by N. Kayden Kim on March 31, 2010 at 06:45 PM

We have a proposed government program to bribe the poor that’s (1) very expensive to implement, and (2) doesn’t work. It’s not necessarily dead–it’s being spun in some quarters as a success.

In my opinion, the free market will do better than all these government programs. Get the unemployment rates down (especially for youth unemployment) and you’ll see good behaviors without government bribes.

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