Cash Incentive Program For Poor Families To Expire

For the past three years, New York City has been paying poor families to engage in positive behaviors like staying in school or going to the dentist.

The goal of the experiment was to raise people's incomes while increasing their chances of escaping poverty for the long term. The pilot program ends this summer, and the first two years of it have already been evaluated. The results are mixed: For some families, the cash changed behaviors; for others, it did not.

Terrence Flowers, 17, who participated in the program, says it helped him. A junior at the FDNY High School for Fire and Life Safety in Brooklyn, Flowers says he went from being a C student to an A student after receiving cash incentives.

"I just needed a push . . . and now I'm on that right track, and I'm going to continue to stay on that right track until I graduate," Flowers says.

Using money from several private foundations, the city is paying Terrence $50 a month for keeping near perfect attendance. It's also paying him $600 for every Regents Exam he passes. Those are statewide standardized tests for high schoolers. In all, he's earned about $3,000. He says $1,200 is in a savings account, and the rest has been spent on a new cell phone and plenty of new designer clothes and shoes including a $300 dollar pair of Prada sneakers with black patent leather patches.

Flowers is clearly motivated by the money and what it can buy, but he also seems motivated by the attention that comes with being a good student. On his living room coffee table is a stack of school certificates and awards. The teenager has been chosen student of the month, recognized for good attendance and made the honor roll three times.

The change at school is also pleasing his mother, Sharon Flowers. "I am very proud of him -- very, very proud," she says.

Sharon Flowers has also been earning extra cash for the family by making sure everyone's getting regular medical checkups. For each doctor visit, the city is paying her $200 and for each dental visit she gets $100. The payments are not intended to cover the cost of the visit; more than 80 percent of the families receiving the incentives have public or private health insurance.

The cash incentives are helping her stay on top of her family's doctors appointments – she now writes them down so she can remember when they are. She recently found out she's diabetic, and the boys also had to have several cavities filled.

A Success?

The Flowers live in public housing. Sharon Flowers is unemployed and says the family survives off her younger son Tyrone's disability check, help from her boyfriend and food stamps.

New York City hired MRDC, a non-profit, to both design and evaluate the effect the cash incentives had on families like the Flowers.

"People had more money. They had on average about $3,000 more per year that they were able to earn by meeting the conditions that the program set. That's a substantial amount of money for low income families," says Jim Riccio from the MRDC.

About 4,800 families with a total of 11,000 children were selected to take part in this experiment. Half were eligible for the cash incentives, the other half were used as a control group. While the program did show results in lowering the poverty rate, increasing dental visits and giving students like Terrence Flowers a leg up, it did not increase employment measurably or have any impact on students who were struggling the most. And there's also the question of whether any positive gains will last.

Dan Ariely, a behavioral economist at Duke University, cautions that paying someone to do something could actually cheapen the value of the behavior and make it even less desirable than it was before the money was offered.

"Will it be the case then that the kids would say 'Not only do I not enjoy studying ,but I'm not getting paid for it now. No chance I am going to learn anything else'?" Ariely says.

The city plans on finding that out. Evaluators will follow families over the next two years to see what happens once the incentives are gone.

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