Foreign Policy Watch

Geopolitical musings through a progressive lens …by Matt Eckel and Jeb Koogler

Taking Down the Income Divide

Tina Rosenberg has written a fascinating column for the NYT on an anti-poverty program that she argues is dramatically reducing the income gap in many places in the developing world. Using Brazil as an example, a country notorious for the glaring divide between its shanty towns and its ritzy high-rise commercial buildings, she points to the statistics: that in less than a decade, poor Brazilians have increased their income at a rate seven times that of rich Brazilians. Overall, poverty has dropped to 7%, down from 22% less than a decade earlier. Rosenberg credits a single program, Bolsa Familia, with having played a significant role. It’s a program that has been duplicated in other parts of the developing world, including in Mexico.

These “conditional cash transfer” (CCT) programs, as they’re called in econ parlance, provide poor families with financial incentives — in the form of a regular check from the local government — in exchange for such requirements as keeping their kids in school, attending workshops on health and nutrition, and making regular visits to the doctor’s office. The aim of these programs is to break the generational cycle of poverty, to give poor families incentives to invest in themselves and in their kids. Rosenberg credits CCT with having had a significant impact on changing the lives of the poor in a number of developing countries.

I was heartened to see that she points to several studies — and more than just anecdotal evidence — to support her claims, as many poverty reduction programs in the developing world seem to be poorly evaluated. (Take microfinance, the hottest new tool of poverty-reduction. A little research indicates that shockingly few microfinance orgs do social impact analysis. Instead, most microlenders seem to quantify their success by trumpeting a low default rate and “the number of clients served,” figures that say nothing about the ways in which their clients are helped — or hurt, in some cases — by small loans.) The data that exists on CCT programs looks promising, and it’ll be exciting to see what happens as this poverty reduction strategy is implemented more widely in the developing world.

Subscribe to Our Posts

Comments Closed

Comments are closed.