How to Promote Long-Term Choices In a Short-Term World
What happens when you’re a parent in the developing world who can only provide for the family if you take your kids out of school and have them work? Not giving them an education will sacrifice their long-term potential, but sometimes short-term needs are just too urgent.
Conditional cash transfers (CCTs) attempt to make that tradeoff unnecessary.
CCTs are development programs that provide cash to families when parents make empowering choices that bring future generations out of poverty.
Typically, the programs provide families with money for each child they send to school. Some programs – like Mexico’s Oportunidades (formerly called Progresa) – also include funds for receiving prenatal and postnatal care, purchasing nutritious food, and having children undergo periodic health checkups.
Finding the Perfect Amount
One central challenge is figuring out the perfect amount to offer. Families need to receive just enough to overcome their incentive to make desperate short-term choices, such as taking the kids out of school.
That amount depends a lot on the unique situation of each family. A family in a rural community a long way from the nearest school or health clinic will often need to receive more money per child than other families to make up for the greater difficulties and cost of transportation.
Also, families often need to receive more for sending older kids to secondary school than they do for sending younger kids to elementary school. Families are more likely to take older children out of school because they can normally make more money working than younger children can. The extra money encourages the families to keep their children’s education going.
CCT programs also normally pay more for sending girls to school than boys. Sadly, many families are more likely to prioritize education for males, which puts females on a more difficult path in life. Unequal payments attempt to even out this gender divide.
The Results: CCTs in Practice
CCTs tend to bear a heavy administrative burden, at least initially. Figuring out just how much to pay and checking up on the families to make sure they are complying with the the program costs a lot.
When Oportunidades began in 1997, determining which families to enroll in the program, calculating how much to pay them, and monitoring their behavior made up about 73% of the total program cost – with only about 8% of funds going directly to families. But by 2000, families received about 41% of the total program funds.
As with any development program, CCTs have their critics. Some people feel exerting influence on familes’ decisions is demeaning and doesn’t respect the parents’ choices as to what is best. A less patronizing program might give the money without strings attached, they say.
According to scholar Hyun Son, the key challenges facing CCTs are keeping the cost of implementing the programs down; ensuring that schools, health care, and nutritious foods are physically available to program participants; and accommodating the differences in individual families’ behavior and preferences.
However, if we can make the assumption that improving education, health care, and nutrition for children is generally good, CCT programs have sometimes delivered strong results.
Oportunidades has increased male enrollment in secondary school by 6% and female enrollment by 9%. It also has had a significant impact on health and nutrition for all ages: children in the program have experienced 12% less illness and adults have reported an 18% decrease in sick/disability days.
CCT programs in Bangladesh and Nicaragua increased primary school enrollment by 9% and 13%, respectively.
These successes may show how, through thoughtful and attentive work, CCT programs can have a significant impact on the long-term prospects of people in the developing world.
Examples of CCT Programs:
Mexico: Oportunidades (formerly Progresa)
Nicaragua: Red de Proteccion Social
Honduras: Programa de Asistencia Familiar
Bangladesh: Food For Education
Chile: Subsido Unico Familiar
And for a scholarly analysis of CCTs overall, check out Hyun Son’s “Cash Transfer Programs: An Effective Tool for Poverty Alleviation?”