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Wednesday, February 06, 2013

'How Effective Is the Safety Net?'

Robert Greenstein of the CBPP corrects Nicholas Kristof:

How Effective Is the Safety Net?, by Robert Greenstein: Nicholas Kristof published an important column in the New York Times recently about young children in some poor communities who face greatly diminished opportunities by the time they’re just 2 years old.[1] “Many low-income children never reach the starting line,” he notes.
Kristof points out that there are no magic bullets and that we need well-designed studies and careful research to give us more information about what works. He cites, for example, evaluation data showing that a program under which nurses visit the new parents of poor, at-risk children produces results. Federal funding for this program, which now comes through the health reform law, is scheduled to run out after 2015. Will policymakers have the wisdom to extend this program and to improve it based on what we’ve learned? That’s the type of action we need to take.
Unfortunately, Kristof’s otherwise excellent column also contains a significant misjudgment. He says that despite the growth of various social programs over recent decades, the poverty rate is no lower today than it was in the late 1960s... However, the comparison of today’s poverty rate to the rate in the 1960s isn’t valid, as explained below, and Kristof overlooks recent research showing that safety-net programs lift millions of people out of poverty and, in a number of cases, have positive long-term effects on children’s outcomes. ...
Most analysts agree that using the official poverty measure to compare today’s poverty rate to the rates in the late 1960s yields highly distorted results due to serious flaws in the poverty measure. ... Comparing poverty rates today with those of more than 40 years ago, based on a poverty measure that counts the part of the safety net that’s shrunk but overlooks key parts that have expanded and now add substantially to low-income families’ purchasing power, produces a result that seemingly shows no progress in reducing poverty. But such a comparison has little meaning.
So what do we know about the safety net’s effect on poverty? A fair amount, and the results are often impressive. ...
To be sure, questions can be raised about the effects of safety-net programs on individual behavior, such as work effort, and how that affects poverty. To address those questions, some of the leading researchers in the field conducted a comprehensive review of the available research and data on the safety net’s impacts on poverty. In a study issued by the National Bureau of Economic Research, they find (after taking behavioral effects into account) that the safety net lowers the U.S. poverty rate by approximately 14 percentage points.[3] In other words, the safety net keeps or lifts one of every seven Americans out of poverty. That’s more than 40 million people. ...
Beneficial effects of key safety-net programs, especially on children, go well beyond poverty reduction. ... In short, existing programs shrink poverty substantially and give large numbers of children a better chance. For millions of Americans who have fallen on hard times, these programs do a good job of helping them get through the hard times and make it out of poverty. ...
Despite these important effects, however, there are too many other poor families and children — those Kristof writes so eloquently about — for whom the existing programs and supports, while often crucial, are insufficient.
As Kristof notes, too many children start kindergarten already far behind, and their future opportunities — including going to college and succeeding in a job — are seriously constrained. ...
We need to do better...
Yet as we look to identify and institute effective interventions, we should be careful not to lose sight of the safety net’s considerable accomplishments or the progress that has been made in improving the lives of tens of millions of less fortunate Americans.

These programs also act as automatic stabilizers for the economy in tough times, and that has benefits that extend far beyond the individual beneficiaries of these social insurance programs.

    Posted by on Wednesday, February 6, 2013 at 12:26 PM in Economics, Income Distribution | Permalink  Comments (18)


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