May 25, 2008
Paying the Poor to Improve their
School Performance
http://www.becker-posner-blog.com/
Gary S. Becker[1]
In the mid-1990's Mexicostarted an anti-poverty program, called
Progressa, that revolutionized the way low income countries try to reduce child
labor and the school dropout rate. This new approach typically pays poor
parents to keep their children in school and to take them for regular health
check-ups. The reasoning motivating this approach is that while poor parents
may love their children as much as rich parents do, the need for greater income
induces poor parents to take their children out of school, so that they can go
to work and add to the family's income. Offering monthly cash payments if the
children remain in school and performs well instead of going to work helps
compensate these families for the loss in their children's earnings.
The results of Progressa are publicly
available so that they can be objectively analyzed, and compared with a control
group of similar families who were not invited into the program. Studies by
economists in the United Statesand elsewhere clearly show that Progressa
has succeeded in inducing the mainly rural parents in the program to keep their
children in school longer than they would have. The budgetary cost of that
achievement has been sizable; although the cost would have been much less if
Progressa had offered the subsidies mainly to parents with children at the
ages-usually when children were in the 6-8 grades-when poor rural Mexican
parents typically took their children out of school.
For many years I have enthusiastic about
using incentives to encourage greater school attendance by children from poorer
families. I first wrote about Progressa, and similar programs in Braziland
elsewhere, in a Business Week article
entitled " 'Bribe' Third World Parents to Keep Their Kids in School", Nov. 22,
1999. Such
programs seem to be the most effective way to induce poor families in
developing countries to reduce child labor by keeping their children in school
much longer. Prior to the introduction of these programs, poor parents simply
ignored laws against child labor, and those requiring children to stay in
school until they either reached a certain age or attained a minimum grade
level.
Until recently, programs similar to
Progressa had spread to many countries, but all of them were low to moderate
income countries. However, within the past year, New York Cityand a few other
American cities have
started experimental programs to adapt the incentive concepts behind Progress
to the situation of poor families in the United States. The New Yorkexperiment
is fully funded by private
foundations and individuals, including Mayor Bloomberg- I will concentrate my
discussion on this city's program. Since the children involved are older than
those in Progressa, they rather than their parents are paid for good attendance
and for raising their test scores. Their parents are also paid to improve the
choices they are more directly responsible for, such as working longer hours,
and taking their children more frequently for health checkups.
It is obviously too early to evaluate the
benefits and costs of the New Yorkexperiment, but I am confident that it will
raise the performance of the students participating. The reason is simply that
boys and girls as well as adults respond to incentives, as every parent
realizes time after time. Rewarding these poor students for better performance
is similar to the tuition scholarships and stipends that colleges award to
students with good grades. To earn the "pay" offered, students
involved will skip school less often. They will also pay closer attention to
their teachers during classes and do more homework, so that they can do better
on the standardized tests that are being used to judge their performance.
Whether this particular experiment has the most effective link between rewards
and increase in performance on these test will only be clear with further
experimentation, but a pioneering program of this kind has to start somewhere.
The New Yorkprogram is not without many critics, which
perhaps explains why it has been funded privately rather than by public
resources from tax revenue. Some critics believe it is wrong to pay children
and parents to do what they should want to do anyway in their own self-interest
since doing better in school will be valuable in getting good jobs when they
are young adults and enter the labor force. Most high school students do in
fact recognize the importance of doing finishing high school and doing
reasonably well, but the New Yorkprogram is directed precisely to those who
are performing badly, perhaps because they heavily discount the future, or are
in dysfunctional families. Other critics content that change has to start with
these dysfunctional families that are responsible for their children skipping
school and their poor school performance. The family is surely important to the
achievements of children, but children from these families and their mothers can
still do much better now if they are given strong financial incentives to do
so.
Another set of criticisms does not deny the
importance of incentives to poor families and their children in rich countries
like the United States.
However, it argues that the existence of incentive programs, such as in the New
Yorkexperiment, will encourage some children
who have been doing well to lower their school performance, so that they can
qualify for the program. All incentive-based programs with income or other
cutoff points induce some families to change their performance to better
qualify for the programs. One has to be mindful of this effect in designing a
program for poor parents and their children to make sure that that it is not so
generous as to attract many more families to qualify by worsening their
performance. I believe that this is a greater problem with the payment system
to parents than that to children, but further experience will inform us about
that.
Yet such possible risks are no reason to
delay incentive-based programs until families become less dysfunctional, or
their children become more aware of the future benefits of better school
performance. Too many children, especially of African-American and Hispanic
backgrounds, are doing so badly in school, and they are dropping out of school
in such large numbers, that we should be willing to try an approach that has
been successful in developing countries. I commend New York for being willing
to take initial steps in the direction of offering financial incentives to
badly performing students that encourage them to work harder to get more out of
their education .
Paying Children to Go to SchoolComment
Richard A. Posner[2]
The Mexican and New York City programs are
well described in Becker's post and in a recent article in the Financial Times
by Christopher
Grimes, "Do the Right Thing," May 24, 2008,
www.ft.com/cms/s/0/a2f1b24a-292a-11dd-96ce-000077b07658.html?nclick_check=1. I
cannot comment on the Mexican program; nor do I oppose social experiments
financed by private money, as in New York. But I am skeptical about the New
Yorkprogram, and if I were a New Yorker I would
be reluctant to support public financing of it.
Before Milton Friedman proposed to replace
welfare programs with a negative income tax--that is, a cash grant with few if
any strings attached--welfare programs were in part devices by which the
government endeavored to buy good behavior from the poor. Hence food stamps,
but not food stamps that could be used to buy liquor. Or money earmarked for
health
or education.
Friedman's criticism of such programs was
that people have a better sense of their needs than government bureaucrats, so
that if the government simply gave poor people money they would allocate it
more efficiently than the welfare bureaucracy would do. This philosophy was
eventually adopted by the federal government in the form of the earned income
tax credit. The danger in giving the poor money (or anything else for that
matter) is that it will reduce their incentive to work; this problem was
addressed by the replacement of welfare by workfare at the state and later the
federal level.
Friedman's analysis requires qualification,
however, when the issue is the welfare of children. The reason is that not all
parents balance their own welfare with that of their children in an impartial
manner. That is why we have laws forbidding child neglect and abuse. It is also
why we have compulsory-schooling laws and forbid child labor. These are
paternalistic laws in a quite literal sense, but are justified to the extent
that there is legitimate concern that not all parents are faithful agents of
their children. Nevertheless, as a general rule parents both know better than
welfare officials what is good for their children and love their children more
than the officials, however well meaning, do, so any proposal to expand the
role of government in controlling children should be viewed with caution.
Public school is both free and compulsory,
and schooling adds considerably to a child's lifetime income prospects, so we
must ask why some parents do not compel their children to attend school
regularly. One reason might be that some of them do not value their children's
welfare. Another that they cannot control their children. And a third that they
do not think their children benefit significantly from regular attendance. I
would guess that the second and third reasons are more common than the first.
Paying children to go to school would
probably have at least some effect in countering all three cases. However, the
benefits would be limited to children who, but for the payment, would attend
school less frequently. I do not know how those children could be identified in
advance, which means that the program would confer windfalls on some, perhaps
many, children. (It would be odd to disqualify children on the basis of their
good attendance!) In addition, there would be substantial costs, both direct
and indirect, to the program. The direct costs would consist of the costs of
distributing the money to the kids, making sure that it is not appropriated by
the parents, and monitoring the children's school attendance. (So: more
bureaucracy.) The indirect costs would include perverse incentive effects--some
parents would spend less on their children to offset the payments that the
children would be receiving for staying in school. Also, giving children their
own source of income would reduce parental control and by doing so weaken
already weak families. And some children contribute more to family welfare by
occasional truancy than by consistent school attendance--for example, they may
be older children helping to take care of younger siblings in households in
which the parents work full time, or in which there is only one parent. Also,
how does one end such a program? If the payments are suddenly withdrawn, will
the kids feel aggrieved and resume truancy with a vengeance?
The largest indirect cost, I would guess,
would consist in relaxed pressure to improve the public schools or to allow
them to be bypassed by means of voucher systems. High rates of truancy may be
due in significant part to low quality of schools. Paying children to attend
school will reduce truancy rates some but without improving school quality, and
perhaps without improving the education of the children receiving the payments.
(School quality may actually decrease, with more crowded classrooms--crowded by
kids who don't really want to be there.) Suppose that a school is in session
200 days a year, a student is truant 10 of those days, and if paid to attend
would
be truant only 5 days. Then the effect of the payment would be to increase the
number of days the child was in school by only 2.5 percent. If it's a bad
school, there might be zero benefit from this modest increase in attendance.
Granted, there are many children in New Yorkwho are truant for much longer
periods. An
article by Harold O. Levy and Kimberly Henry, "Mistaking Attendance," New York
Times, Sept. 2, 2007,
www.nytimes.com/2007/09/02/opinion/02levy-1.html?_r=2&ex=1189396800&en=1d2692cb89c474d7&ei=5070&emc=eta1&oref=slogin&oref=slogin,
estimates that 30 percent of New Yorkpublic school students miss a month of
school every year. But they may be children who for mental or psychological
reasons, or extreme family circumstances, cannot benefit significantly from
additional schooling. The beneficial effects of paying children to go to school
are likely to be concentrated on the kids who are casual rather than extreme
truants, and those benefits, as suggested by my numerical example, may be
slight.
Another component of the program is paying
children for performing well on standardized exams. Such measures reward work
more directly than paying for attendance, and also avoid the bad signal that is
emitted by bribing people to do what the law requires them to do (i.e., attend
school until 16 or 18, depending on the state), but they may largely reward
intelligence rather than study. Working hard in school is no guaranty of
getting good grades. Scholarships for promising students and awards for high
performance have good effects, but the paid students are unlikely to qualify in
competition with students who do not have to be paid to attend school.
Paying children to attend school is a
band-aid approach at best. Far better would be a voucher system that would
create
competition among the public schools to serve children better.
________________________________
[1]Gary S. Becker is University Professor,
Department of Economics & Sociology and Professor, Graduate School of
Business, The University of Chicago. He
was the recipient of the 1992 Nobel Prize in economics.
[2]Richard A. Posner is Judge, United StatesSeventh Circuit Court of Appeals
and Senior
Lecturer, University of Chicago Law School
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