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Posts Tagged ‘poverty’

U.S. Math Education Still in the Doldrums

Every three years, the OECD, in the PISA assessment, studies 15-year-olds around the world to measure performance in reading, mathematics, and science. The results of the 2012 PISA assessment, which had a particular focus on mathematics, just came out and the United States does not fare well: “Among the 34 OECD countries, the United States performed below average in mathematics in 2012 and is ranked 26th.” I worry not so much about the rank, but about the low absolute level of proficiency to get this rank.

The U.S. students’ particular strengths and weaknesses are even more distressing:

Students in the United States have particular strengths in cognitively less-demanding mathematical skills and abilities, such as extracting single values from diagrams or handling well-structured formulae. They have particular weaknesses in items with higher cognitive demands, such as taking real-world situations, translating them into mathematical terms, and interpreting mathematical aspects in real-world problems.


What Do You Want to Know About Fighting Poverty With Cash Payments?

If you happen to be in New York on Mon., Nov. 11, you might want to come see Richard Thaler and Dean Karlan talk about “using evidence and behavioral economics to fight poverty.” The event (info here) is run by the Innovations for Poverty Action, of which Karlan is president. I will moderate the Thaler-Karlan discussion — which means I get to ask them any questions I want about whether and why it is a good idea to fight poverty by giving cash directly to poor people rather than the traditional means of directing aid toward institutions and hoping that it trickles down fruitfully. (There are, of course, more options than just those two.)

In our recent podcast called “Would a Big Bucket of Cash Really Change Your Life?,” we looked at whether a windfall helps a family across the generations. The short answer, at least in the case of the 19th-century land lottery that we discussed: no.


How Cost Impacts College Applications

A new NBER paper (abstract; PDF) by Amanda Pallais looks at how small fees impact the application behavior and outcomes of low-income students. Using data from the ACT, she found that an increase in the number of free score reports that students were permitted to send to colleges resulted in students sending their scores to a wider range of colleges, with low-income students attending more selective colleges. These outcomes were surprising because the non-free score reports were a mere $6. The abstract:

This paper estimates the sensitivity of students’ college application decisions to a small change in the cost of sending standardized test scores to colleges. Using confidential ACT micro data, I find that when the ACT increased from three to four the number of free score reports that ACT-takers could send, the fraction of test-takers sending four reports rose substantially while the fraction sending three fell by an offsetting amount. Students simultaneously sent their scores to a wider range of colleges. Using micro data from the American Freshman Survey, two identification strategies show that ACT-takers sent more college applications and low-income ACT-takers attended more selective colleges after the cost change. The first strategy compares ACT-takers before and after the cost change, controlling for time trends and covariates, and the second estimates difference-in-difference regressions using SAT-takers as a control group. Back-of-the-envelope calculations suggest that by inducing low-income students to attend more selective colleges, the policy change significantly increased their expected earnings. Because the cost of sending an additional (non-free) ACT score was merely $6 throughout, this sizable behavioral change is surprising and suggests that students may use simple heuristics in making their application decisions. In such a setting, small policy perturbations can have large effects on welfare.


The Millennium Ethical Fallacy: Why Ignore Future Children?

Economist Jeffrey Sachs, the force behind the Millennium Villages Project, is in the news as a book chronicling his efforts is released – Nina Munk’s The Idealist: Jeffrey Sachs and the Quest to End Poverty.  You can read about it in the Wall Street Journal, or read excerpts in the Huffington Post.  Sachs’s project is a major effort at a new way to fight poverty in Africa, as Joe Nocera, writing in The New York Times, explains:

The quest began in 2005, when Sachs, who directs the Earth Institute at Columbia University, started an ambitious program called the Millennium Villages Project. He and his team chose a handful of sub-Saharan African villages, where they imposed a series of “interventions” in such areas as agriculture, health and education. The idea was that these villages would show Africa — and the world — how the continent could loosen the grip that extreme poverty had on so many of its people.

Sachs admirably raised millions, drew attention to efforts to alleviate poverty around the world, and launched Millennium Villages in several countries. However, the reviewers hone in on the book’s discussion of many of the difficulties, such as drought, disease, locals who resisted the idea of selling their prized camels at the new markets set up for them, or locals who used the anti-malarial bednets on their goats rather than their children.


Does Child Abuse Rise During a Recession?

How do economic conditions affect the incidence of child abuse?  While researchers have found that poverty and child abuse are linked, there’s been no evidence that downturns increase abuse.  A new working paper (PDF; abstract) by economists Jason M. Lindo, Jessamyn Schaller, and Benjamin Hansen “addresses this seeming contradiction.” Here’s the abstract, with a key finding in bold:

Using county-level child abuse data spanning 1996 to 2009 from the California Department of Justice, we estimate the extent to which a county’s reported abuse rate diverges from its trend when its economic conditions diverge from trend, controlling for statewide annual shocks. The results of this analysis indicate that overall measures of economic conditions are not strongly related to rates of abuse. However, focusing on overall measures of economic conditions masks strong opposing effects of economic conditions facing males and females: male layoffs increase rates of abuse whereas female layoffs reduce rates of abuse. These results are consistent with a theoretical framework that builds on family-time-use models and emphasizes differential risks of abuse associated with a child’s time spent with different caregivers.


Now Hiring

I have two exciting (at least what I consider exciting) job openings at Innovations for Poverty Action, both helping to design and test applications of behavioral economics to savings. Please help get the word out (note, they require some specialized expertise and experience, ideally someone with consumer banking experience).

Post #1: Manager or Director of our US Household Finance Initiative (USHFI). This initiative uses ideas from behavioral economics to test ideas to improve consumer finance policies and products in the United States. The position will require managing a number of projects, but here’s one example: Both debt and savings are all about small deposits and large withdrawals. But order matters. And habits matter. Banks help us form habits to pay down debt (they’ll hunt us down if we don’t). When someone is paying down expensive (higher than they can reasonably expect to earn on any investment) debt, they shouldn’t simultaneously accumulate savings. But how can we shift someone quickly (ideally automatically) into savings right when the debt is fully paid off? The plan is to have a seamless transition moment, so that the payments continue but now go to savings rather than paying down debt. (More info here).


Bad Incentives That Work Quite Well: The Opportunity Cost of Political Partisanship

Nick Kristof, writing in the N.Y. Times:

This is what poverty sometimes looks like in America: parents here in Appalachian hill country pulling their children out of literacy classes. Moms and dads fear that if kids learn to read, they are less likely to qualify for a monthly check for having an intellectual disability.

Many people in hillside mobile homes here are poor and desperate, and a $698 monthly check per child from the Supplemental Security Income program goes a long way — and those checks continue until the child turns 18.

And:

This is painful for a liberal to admit, but conservatives have a point when they suggest that America’s safety net can sometimes entangle people in a soul-crushing dependency. Our poverty programs do rescue many people, but other times they backfire.


The Benefits of the Safety Net

A new working paper (abstract; PDF) by Hilary W. Hoynes, Diane Whitmore Schanzenbach, and Douglas Almond examines the effects of in utero and childhood access to the social safety net, specifically food stamps:

A growing economics literature establishes a causal link between in utero shocks and health and human capital in adulthood. Most studies rely on extreme negative shocks such as famine and pandemics. We are the first to examine the impact of a positive and policy-driven change in economic resources available in utero and during childhood. In particular, we focus on the introduction of a key element of the U.S. safety net, the Food Stamp Program, which was rolled out across counties in the U.S. between 1961 and 1975. We use the Panel Study of Income Dynamics to assemble unique data linking family background and county of residence in early childhood to adult health and economic outcomes.


Research from My Favorite Economic Gabfest

I’ve just gotten back home after a terrific few days at the Brookings Panel on Economic Activity.  It’s my favorite gabfest of the year, featuring economic analysis that is both serious research, and also connected to ongoing policy debates.  (OK, I’m biased–I’m an editor, and organize the conference along with Berkeley’s David Romer.)  And while I think some of you may enjoy slogging your way through the latest papers, others may prefer your summaries simpler and lighter. So I went ahead and recorded a few short videos summarizing the papers. I hope you enjoy!


Happiness Up, Poverty Down

This is a crosspost from Consultative Group to Assist the Poor (CGAP).

There was plenty of encouraging information shared at the recent “Reaching the Poorest 2012” meeting, convened by CGAP and the Ford Foundation. Together with my fellow researchers, I was among the panelists who presented the findings of well over five years worth of randomized control trials evaluating the impact of the Graduation Model. The projects that were evaluated in Bangladesh, Pakistan, Honduras, and India showed an impact on the livelihoods of the poorest that were targeted. The results were mostly heartening – they showed that Graduation Program participants typically improved their food security, stabilized and diversified income, and increased their assets.

The benefits we’re seeing in the lives of the poorest are big and important. The results are strong evidence that the Graduation Model can work. (We’ll know even more in a couple years when we have full results from seven pilots, with more sites and longer term results to see if results sustain themselves.) One of the most intriguing, and I believe important, results is the simplest: happiness went up in the two sites where “happiness” was measured (Honduras and West Bengal).  As part of the surveys to measure the impact of the program on their livelihoods, participants were also asked a series of questions on their general level of happiness and mental health. Often we talk about consumption and income as a measure of wellbeing.


Banned Products, Available in Poor Countries

In a recent Harry Hole mystery novel, The Leopard, Jo Nesbø (an economist as well as novelist) has Harry ask someone, “Where would you go to get it [a particular anesthetic] now?” and is answered, “Ex-Soviet states. Or Africa….The producer sells it at bargain-basement prices since the European ban, so it ends up in poor countries.” When rich countries ban something, they increase its supply to poor countries that refuse to ban it.  Prices are lowered to consumers there.  Rich countries’ safety is enhanced, poor countries’ worsened, with the only consolation that consumers in poor countries become able to obtain the harmful substance at lower prices.  Are people in each country better off, worse off, or what?


Hope and Poverty

Is there a role for hope in poverty alleviation programs?  According to a recent speech by economist Esther Duflo, there is. Duflo looked at a BRAC program in West Bengal; program participants were given a “small productive asset” (a cow, a goat, or some chickens) and a small stipend to encourage participants not to immediately eat the animal. The results were significant:

Well after the financial help and hand-holding had stopped, the families of those who had been randomly chosen for the BRAC programme were eating 15% more, earning 20% more each month and skipping fewer meals than people in a comparison group. They were also saving a lot. The effects were so large and persistent that they could not be attributed to the direct effects of the grants: people could not have sold enough milk, eggs or meat to explain the income gains. Nor were they simply selling the assets (although some did).


Acemoglu and Robinson Answer Your Questions

Last week, we solicited your questions for economist Daron Acemoglu and political scientist Jim Robinson, who just published a new book called Why Nations Fail: The Origins of Power, Prosperity, and Poverty and are now blogging on a variety of interesting development topics.

Their thoughtful responses below cover everything from robber barons to the artificial construction of African nations to whether the race of a country’s leaders determines its success.  A big thanks to Daron, Jim, and all our readers for another great Q&A.  

First, a note from Daron and Jim: “We thank everybody for these excellent questions and comments. We had to pick a few to be able to provide detailed answers.


Wondering Why Nations Fail? Bring Your Questions for Daron Acemoglu and James Robinson

When it comes to economic ideas, Daron Acemoglu never thinks small. Widely acknowledged as one of the most insightful economists alive, Daron seems to have brilliant things to say about any and all things economic.

When you have that sort of gift, you might as well go after the biggest problems imaginable.  Thus his latest book, Why Nations Fail, written with Harvard political scientist James Robinson.

It is an awesome piece of work.  So full of ideas and wisdom, but still so easy to read.  I just love it.  Daron and Jim have agreed to take your questions about their new book, so please leave them in the comments section below.  To get you started, here’s the table of contents:


Cash Transfers: The Key to Keeping the World's Working Kids in School?

A new paper from Eric V. Edmonds and Norbert Schady finds that cash transfer programs in developing countries may keep kids in school and out of the labor force. From the abstract:

Poor women with children in Ecuador were selected at random for a cash transfer equivalent to 7 percent of monthly expenditures. The transfer is greater than the increase in schooling costs at the end of primary school, but it is less than 20 percent of median child labor earnings in the labor market. Poor families with children in school at the time of the award use the extra income to postpone the child’s entry into the labor force. Students in families induced to take-up the cash transfer by the experiment reduce their involvement in paid employment by 78 percent and unpaid economic activity inside their home by 32 percent.


Bargain Hunting for Charities

Gosh that sounds so stingy. When we are charitable, we don’t want to be cheap. This is our moment of giving, of generosity, not bah-humbugness. Alas, that is exactly what we should be. If we go to a restaurant for chicken wings, what would you think of the following prices:

4 chicken wings: $8
6 chicken wings: $8
8 chicken wings: $8

Which would you opt for (assuming more is always better)? Naturally, it shouldn’t require much thought. So why not apply this to charity?

This is what Givewell does. (And I’m pleased to say, you can see the imprint of lots of research from Innovations for Poverty Action on their assessments and recommendations). You may remember I blogged about Givewell over the summer, and how there is no correlation between their assessment of organizational effectiveness and the horrid measure often used by those in search of a good charity, “general administrative and fundraising expenditures as a proportion of program expenses.”


In Search of an NGO in New Delhi

I’m going to be in India this week, just for a few days. My time is completely booked except for a few hours on the morning of Friday, Dec. 2. I’m looking for an NGO that works with the downtrodden in New Delhi and is willing to show me around some poor neighborhoods there. In return, I will donate $5,000 to that NGO in appreciation.

Can any blog readers provide guidance on this? I know it is short notice.


For White Girls, a Bigger Penalty for Being Obese

We hear increasingly about the healthcare costs of obesity; but what about social costs?

A forthcoming Economics and Human Biology paper (abstract here; PDF here) by Mir Ali, Aliaksandr Amialchuk, and John Rizzo, titled “The Influence of Body Weight on Social Network Ties Among Adolescents,” makes this interesting argument:

We find that obese adolescents have fewer friends and are less socially integrated than their non-obese counterparts. We also find that such penalties in friendship networks are present among whites but not African-Americans or Hispanics, with the largest effect among white females.


The Suburb as the Slum: Housing Voucher Shifts in America

A new working paper from the Brookings Institution’s Metropolitan Opportunity series examines a major demographic shift in housing voucher recipients from the cities to the suburbs. Authors Kenya Covington, Lance Freeman and Michael A. Stoll write: “Just as the suburbanization of poverty has gathered momentum, Americans who use housing choice vouchers (HCV) to help pay for their housing have increasingly moved into suburban areas as well.” The authors studied data from 2000 to 2008 to see how this shift has taken place.

They found that:

Nearly half of all HCV recipients lived in suburban areas in 2008. However, HCV recipients remained less suburbanized than the total population, the poor population, and affordable housing units generally.
Black HCV recipients suburbanized fastest over the 2000 to 2008 period, though white HCV recipients were still more suburbanized than their black or Latino counterparts by 2008. Black HCV recipients’ suburbanization rate increased by nearly 5 percent over this period, while for Latinos it increased by about 1 percent. The suburbanization rate for white HCV recipients declined slightly.


Does Fingerprinting Food Stamp Recipients Save Money?

What do New York City and Arizona have in common? No, this is not a trick question; there is one thing: currently, they are the only jurisdictions in the country that require food stamp recipients to register their fingerprints in an electronic database. California and Texas recently lifted their fingerprinting requirements.

Not surprisingly, this has touched off a debate over social utility and costs in New York. Proponents say that the resulting fingerprint database saves the city millions of dollars a year in duplicate fraud. Last year, the Human Resources Administration said it found 1,900 cases of duplicate applications for 2010, with savings of nearly $5.3 million.

Detractors claim this estimate is unproven and that fingerprinting keeps a certain amount of needy people out of the system through intimidation.


What's the Best Way to Measure Poverty: Income or Consumption?

Yesterday we learned that 15.1% of Americans were living in poverty in 2010, the highest level since 1993, and up nearly 1 percentage point from 2009, when it was 14.3%. That data is based on an income measurement which shows that in 2010, 46.2 million Americans were living below the poverty line, defined as $22,314 a year for a family of four.
But income is just one way to measure poverty, and a particularly tricky (and narrow) way at that – so says Notre Dame economist and National Poverty Center research affiliate, James Sullivan, who believes that to measure poverty strictly by income fails to accurately reflect people’s true economic circumstances. Income alone ignores the effects of things like the Earned Income Tax Credit, Medicaid, food stamps, and housing subsidies. From a Notre Dame press release on Sullivan’s recent poverty research:

“Income received from food stamps, for example, grew by more than $14 billion in 2009. By excluding these benefits in measuring poverty, the Census figures fail to recognize that the food stamps program lifts many people out of actual poverty,” Sullivan says. “If these programs are cut back in the future, actual poverty will rise even more.”


Why Do Housing Vouchers Lead to Fewer Deaths Among Young Girls, But Not Boys?

A new NBER working paper by Brian Jacob, Jens Ludwig and Douglas Miller examines how improved housing conditions impact child mortality rates in Chicago. The improvement in child mortality seems to apply only to girls, and not boys. The data come from Chicago’s resuscitated housing voucher system, from 1997 through 2005. Here’s the abstract:
The study builds on the findings of the federal government’s Moving to Opportunity experiment, which started in the mid-1990s and offered randomly chosen residents of public housing the chance to move to a wealthier neighborhood (poverty below 10%). Among adults, rates of obesity and mental health problems declined, but the effects were mixed on the risky behaviors of kids. Girls did better, while boys did worse.


More Misadventures in Foreign Aid?

Last week CNN told the story here and here of Derreck Kayongo, a refugee from Uganda now living in Atlanta. His father was a soap-maker, and Mr. Kayongo is following in his footsteps, but with a nonprofit twist: he cleans and reprocesses discarded used soap bars from American hotels and ships them to Africa. He started the Global Soap Project, a U.S.-based non-profit organization, to do this.
An inspiring story of someone trying to turn waste into something good. That of course is great, and I like the ingenuity. And I admire how Mr. Kayongo has managed to navigate both the nonprofit and corporate space to figure out how to mobilize people to contribute the soap, and to coordinate delivery to people in need.
But is the best solution here really half-used soap?


Why Ranking Charities by Administrative Expenses is a Bad Idea

How does one know whether a charitable donation will make an impact? For this we need a simple formula (easy to write, hard to apply):

Idea X Implementation = Bang for your buck

When I give talks about aid effectiveness, people often comment that they too think this is important. And to make sure they are supporting good charities, they always hone in on the charities’ finances to see how much goes to administrative and fundraising expenses. Charity Navigator, for example, scrubs these numbers and doles out stars to charities that don’t spend “too” much on operations.
Given the title of my book with Jacob Appel, More Than Good Intentions, many assume that they are speaking my language, and that I admire such focus on those numbers too.
But I do not. Those numbers do not tell you what is really happening.


Winners of Heart + Mind Donations Contest

Earlier I ran a contest for two free copies of More Than Good Intentions. The quick summary: we ran a randomized trial to test whether employing the use of statistics, and worse yet scientific evidence, would raise more or less money when added to a standard emotional appeal in a direct mail marketing solicitation for donations for Freedom from Hunger (a charity I respect and do research with). We split the analysis by size of prior gift. The Freakonomics contest then asked two questions:


Deciding How to Decide: Taste-Matching Or Expert-Based?

This blog post is co-authored with Jacob Appel, co-author of my recent book, More Than Good Intentions.
Among the many questions David Gomberg and Justin Heimberg pose in their hilarious book Would You Rather is the following:

“Would you rather…
Become increasingly intelligent with the consumption of alcohol, but also become increasingly convinced you are Gloria Estefan
OR
Have a firm grasp of Roman numerals but look exactly like Weird Al Yankovic?”

Well, that’s a tough one. Seriously. It’s a classic problem of apples and oranges—or maybe, given the absurdity of the alternatives, a problem of apples and, say, cut-off jeans shorts—two things that are thoroughly incommensurable. Fortunately, those are not real choices.


Heart + Mind? Or Just Heart? Experiments in Aid Effectiveness (And a Contest!)

When signing our book, More Than Good Intentions, Jacob Appel and I often sign “Heart + Mind = Good Giving.” Nobody argues with the premise that we should act with compassion, but be smart about it. Of course nobody would ever say they do not care about the effectiveness of the charity they support.
But in practice, does evidence about charitable effectiveness impact donations? Or does the presentation of dorky evidence turn off the emotions that cause us to donate in the first place?


Global Poverty Shifting Toward Middle Income, Failed States

A new report from The Brookings Institution examining global poverty rates since 2005 notes two primary trends: poor people are increasingly found in middle-income countries and in fragile states.
Brookings notes the obvious success of the one:

Over the past decade, the number of countries classified as low-income has fallen by two fifths, from 66 to 40, while the number of middle-income countries has ballooned to over 100. This means 26 poor countries have grown sufficiently rich to surpass the middle-income threshold. Among those countries that have recently made the leap into middle-income status are a group of countries – India, Nigeria and Pakistan – containing large populations of poor people. It is their “graduation” which has brought about the apparent shift in poverty from the low-income to middle-income country category.
 

And troubling failure of the other: