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Wednesday, October 04, 2006

Payment for Good Behavior

Should we pay people to behave?:

Pay for Good Behavior?, by James Traub, NY Times Magazine: ...About 37 million Americans continue to live below the poverty line. No one living in a big city can be blind to the plight of the poor. In his second inaugural speech, in 2005, New York’s mayor, Michael Bloomberg, vowed to focus on poverty reduction, and last month he announced the findings of his blue-ribbon Commission for Economic Opportunity. ...

Mayor Bloomberg embraced many of the proposals and offered several more daring ones of his own. He proposed that New York become the first city in the country to offer a child-care tax credit, limited to low-income families with children under age 3. And more controversially, he vowed to raise $24 million in private donations to finance “conditional cash transfers” to give poor New Yorkers an incentive “to stay in school, stay at work and stay on track to rise out of poverty.” A mayoral aide later explained that this behaviorist approach to fighting poverty has become popular in the developing world and has had a “phenomenal” effect on school attendance in Mexico. (The Bloomberg administration has not stipulated how much it will pay or which behaviors it will reward.)

The mayor’s own plan drew a good deal more attention than the commission report did, perhaps because it seemed to be at odds with the report’s slightly-left-of-center ethos. Heather Mac Donald, a fellow at the conservative Manhattan Institute for Policy Research, welcomed Bloomberg’s implicit acceptance of the view that “it is the underclass poor who need to change more than society or capitalism.” At the same time, she argued that he had undermined the case for self-reliance by establishing “an expectation among the underclass that they have a right to cash for simply conforming to the norms of civil society.” Bloomberg responded by noting that if you could use a tax credit to “encourage people to do certain types of economic activity,” you could use cash just as well.

The mayor’s idea has a conservative as well a third-world pedigree: Newt Gingrich once proposed paying children for good grades. Market-oriented conservatives proceed from the assumption that people make rational calculations of self-interest; theorists like Charles Murray and Lawrence Mead long argued that welfare payments encouraged recipients to stay on welfare rather than to work. Welfare reform eliminated that perverse incentive. Why, then, not offer affirmative incentives to engage in healthy behavior? Is there some reason you learn a lesson better from a stick than from a carrot? Or does it just offend our sense of justice to pay people to do what others do for nothing?

The liberal objection to paying for good behavior is that it assumes that behavior lies at the root of poverty. But this argument has steadily lost ground over the last generation, and the goal of policy is now both to encourage good behavior and to connect good behavior with good opportunities.

Moral considerations nothwithstanding, you could argue that Bloomberg’s plan takes far too benign a view of the problem of self-destructive habits. “The stress of poverty,” the mayor said in announcing the program, “often causes people to make decisions,” by which he meant poor decisions. But many scholars would say that the problem runs much deeper, to the cumulative effect of “underclass culture.” Lollipops for good behavior will not break those shackles.

The problem is, What will? A conscientious program of lollipop deprivation? Lectures about the dreadful consequences of cutting school or not making child-support payments? Heather Mac Donald would have Bloomberg stop bribing the poor and instead “call on private industry and ad councils to start a massive educational campaign about marriage.” But why would we imagine that mere rhetoric could dislodge ... deeply entrenched habits...? It’s true that poor people who adopt “middle-class values” generally succeed, but you can no more change their behavior by telling them so than you can produce democracy in the Middle East merely by preaching its virtues. The transformation of a culture is slow, arduous work, requiring material support as well as moral and intellectual renewal.

The whole thing is reminiscent of a famous maxim coined by Daniel Patrick Moynihan: “The central conservative truth is that it is culture, not politics, that determines the success of a society. The central liberal truth is that politics can change a culture and save it from itself.” The central Bloombergian truth may be that in the absence of serious political energy, a modest appeal to self-interest will have to do.

Some parents pay their kids for good grades. Others take privileges away or impose other penalties when grades fail to meet certain standards. Carrots and sticks. Others don't care much either way. I am in the no pay group, but it's a lot easier to say that when your children are eager to learn and you aren't at the end of your rope trying to figure out how to get the kid to care about school, and yet another lecture or penalty would likely be counterproductive. I'm not sure there's a right answer to this, and parents certainly have a right to create incentives for their children to adopt certain values. But something bothers me about paying people to behave, more so when the government is involved. I don't mean there aren't other reasons to support programs such as education subsidies for the underprivileged, just that paying people to behave according to the government's definition of "middle-class values" is not among them.

    Posted by on Wednesday, October 4, 2006 at 04:32 PM in Economics, Policy | Permalink  TrackBack (0)  Comments (21)

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