The Mixed Blessings of a Welfare Program

A new paper (abstract; PDF) by Gustavo J. Bobonis, Melissa González-Brenes, and Roberto Castro examines the effects the Mexican welfare program Oportunidades on spousal abuse:

Beneficiary women are 40 percent less likely to be victims of physical abuse, but are more likely to receive violent threats with no associated abuse. This evidence is consistent with a model of decision-makers’ interactions with asymmetric information in the male partner’s gains to marriage, who can then use threats of violence to extract rents from their female partners.

“The article may have important implications for policy, since it provide a mixed view of conditional cash transfer programs’ effectiveness in improving women’s empowerment within the household,” the authors wrote in an earlier draft. “The program may increase the likelihood of violent threats, which may in turn compromise women’s emotional health and other aspects of their wellbeing.”

In SuperFreakonomics, Levitt and Dubner wrote about another interesting research finding gleaned from Oportunidades data:

Consider the Mexican welfare program Oportunidades. To get aid, applicants have to itemize their personal possessions and house hold goods. Once an applicant is accepted, a caseworker visits his home and learns whether the applicant was telling the truth. César Martinelli and Susan W. Parker, two economists who analyzed the data from more than 100,000 Oportunidades clients, found that applicants routinely underreported certain items, including cars, trucks, video recorders, satellite TVs, and washing machines. This shouldn’t surprise anyone. People hoping to get welfare benefi ts have an incentive to make it sound like they are poorer than they truly are.

But as Martinelli and Parker discovered, applicants overreported other items: indoor plumbing, running water, a gas stove, and a concrete floor. Why on earth would welfare applicants say they had these essentials when they didn’t?

Martinelli and Parker attribute it to embarrassment. Even people who are poor enough to need welfare apparently don’t want to admit to a welfare clerk that they have a dirt floor or live without a toilet.

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  1. MS says:

    I wonder if some of the overreporting is tied to additional subsidies for water, gas, electric, etc. I don’t know how the system is structured, but if there’s additional money given to pay the water bill, it would make sense to claim to have running water.

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    • CC says:

      @MS

      From reading the English and Spanish page versions of the program, it seems like the aid focuses mainly on food subsidies, health care, and educational grants. It does not mention anything about subsidies for utilities, though I suppose you can use the cash transfers to pay for those necessities as well. It just doesn’t seem they are directly considered for separate/additional aid.

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      • MS says:

        Well, another perfectly good theory ruined by facts…

        Seriously, thanks for the clarification.

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  2. frankenduf says:

    this research should also be used to modify bank welfare policy- giving banks money may make it more likely that they get robbed- also, this article shows that we should have caseworkers visit banks to verify their books- lord only knows what accounting chicanery banks use to influence both welfare payments as well as shareholder equity

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    • MindTheGAAP says:

      We do have case workers to inspect the banks. They’re called independent auditors.

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  3. Litenarata says:

    I wonder if they also underreport those certain items because the family applying for welfare did not buy them. Those are the types of things frequently purchased for them by relatives living and working in the U.S. One of the side effects of our own nasty recession was that poor families who depended on remittances from relatives here no longer receive that money and are now struggling.

    So just because they have a car and a TV doesn’t mean they were able to afford it and are scamming the system. It’s entirely possible that they were gifts and that they genuinely need help.

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    • Enter your name... says:

      Well, yes, what you say is true. But it’s also true that if you own a television and you need money to buy food, then you can sell the television and use the money to buy food.

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  4. Eric M. Jones says:

    I would like to suggest that this might be very culturally based.

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  5. Enter your name... says:

    “Beneficiary women are 40 percent less likely to be victims of physical abuse, but are more likely to receive violent threats with no associated abuse.”

    What are the absolute rates? A 40% reduction in a rare event is not always as bad as a small increase in a common one.

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