Conditional Cash Transfers

Conditional cash transfers have been
a very successful anti-poverty program

especially in Latin America.

In Mexico, for instance, the government
started a program in 1997 called Progresa

later relabeled Oportunidades
which quite simply means opportunities.

The way it works is pretty simple.

If the family sends a child to school,

the family is paid some cash
if the child continues to go to school.

If a family regularly sends a child
to healthcare clinics,

the family is paid some cash
and possibly also some in-kind aid

such as nutritional supplements.

The exact sums will vary
with circumstances

but imagine payments for child ranging
between say 5 to 20 dollars a month.

If your household is otherwise earning
only, say, a few dollars a day,

that's quite a considerable amount.

In theoretical terms,

you can think of these programs
as being quite special in two ways.

First, they target aid at the level
of the individual household

by using census data.

And second, they are multisectoral,

that is they address education,
health, and nutrition all at once.

The government tries to find out exactly
who needs the aid and then to deliver it.

This program is based on a lot of data
at the individual family level.

So, we do have a good sense
of how well it's working

and it seems it's working
quite well indeed.

For instance, the program really has led
to improved school enrollment,

especially for girls.

At the same time, the program
has limited child labour.

You might think it's a problem
that families earn less

because the children are working less,

but the transfers from the program
more than make up for that difference.

One study found that 26% of
the cash transfer is invested

by the families who receive it.

After 18 months, due to those investments,
agricultural income went up by almost 10%.

That means the families have permanently
higher standards of living

due to these conditional cash transfers.

Finally, the program has indeed
brought better health and nutrition

for the recipient children.

The program can be thought of
as a revolution in social policy.

One aspect of the program
that's not always remarked upon

is simply how scientific an approach
Mexico has taken to public policy

not only implementing the program
but tracking the results

and fine-tuning it and
improving it over time.

Arguably, Mexico is, in this case,

taking a more scientific approach
to public policy

than is often done in,
say, the United States.

The idea of conditional cash transfers
is one which is spreading

around the world, especially
in Latin America

including Chile, Colombia
and especially Brazil.

Studies also indicate
it's done a good deal

to lift people out of poverty in Brazil.

This is a very well studied topic,
as I mentioned, with excellent data

and it's possible to test
for various controls,

say, by comparing families
who receive the cash transfers

with families who do not.

For further reading,
I would recommend that

you google some of these terms.