Ever since first making their mark in the nineties, Conditional Cash Transfer (CCT) programs have become the most discussed idea in development policy making. Nancy Birdsall, of the Center for Global Development, calls CCTs "as close as you can come to a magic bullet in development". CCTs work on the twin ideas that inter-generational poverty is, at least in part, a "behavioral" problem that can be modified through free-market incentives and that providing direct cash to the recipients is the most efficient way of distributing welfare benefits.
Via Chris Blattman, the two latest developments on Conditional Cash Transfer (CCT) programs - analysis of a CCT trial in New York City and a World Bank study on the evidence from CCT programs across the world.
In September 2007, New York Mayor Mike Bloomberg launched the Opportunity NYC as a three year experimental CCT program, on the lines of the hugely successful Oportunidades Prgram of Mexico, for a broad range of health, education, and work-related activities. It is funded entirely by private philanthropies (including that of Mr Bloomberg), is being evaluated by a non-profit research firm, MDRC, using a random assignment research design and is administered by Seedco, a nonprofit community development organization. Families are rewarded with $200 per family member for annual doctor's visits and $50 per child every two months for good school attendance. Parents can receive from $40 to $100 a month if they keep up with their responsibilities with the education and health of their children.
A recent evaluation of the program reveals many positive things. Only 43 percent of families had a bank account when they enrolled in the program; now over 90 percent of the families have accounts, a requirement for receiving the payments. It has so far paid $10 million to 2,400 families living at or beneath 130% of the poverty line - about $22,000 for a family of three, and the typical participating family earned just under $3,000 during Opportunity NYC's first year.
Mexico's Oportunidades program, started in 2002 and covering 5 million households now, providing cash payments to families in exchange for regular school attendance, health clinic visits, and nutritional support, has become the touchstone for Conditional Cash Transfer (CCT) programs across the world.
The World Bank report (full report pdf), the first comprehensive evaluation of CCT programs across the globe, finds that these programs "can reduce poverty both in the short and long term, particularly when supported by better public services". The World Bank, whose lending support for CCT operations now covers 13 countries, expects to lend about $2.4 billion this year to start or expand CCT operations in Bangladesh, Colombia, Kenya, Macedonia, Pakistan, and the Philippines.
Unlike traditional anti-poverty and development programs, since their inception CCT programs have been followed by a vibrant culture of documentation, monitoring and evaluation that have contributed immensely towards course corrections, designing program components, and impact assessments.
Every Latin American country, Bangladesh, Indonesia, and Turkey, have large scale CCT programs while there are pilot programs in Cambodia, Malawi, Morocco, Pakistan, and South Africa. Bangladesh has programs for getting back out of school children, to incentivize unmarried girls who have completed primary schools attend secondary schools, and for primary school going poor children. India, stuck up with Self Help Groups (SHGs), micro-loans, and subsidies, remains alone among the major developing countries without even a pilot CCT program (apart from a small one in Haryana, and that too badly evaluated).
Update 1 (4/1/2010)
Tina Rosenberg assesses CCT programs in Brazil and Mexico.