Last November I wrote a post about eight Programs That Fight Poverty selected by Tina Rosenberg a New York Times editorial board member. Number four on her list was a Mexican program that “bribed the poor” called Oportunidades. That program was again in the news after New York Mayor Michael Bloomberg visited Mexico to see how the program works and assess its potential for fighting poverty in New York City [“In Mexican Town, Maybe a Way to Reduce Poverty in New York,” by Ray Rivera, New York Times, 25 April 2007]. Rivera begins his piece by setting the scene Bloomberg and his party observed:

“For a few days every other month, the narrow sidewalks of Tepoztlán, a scenic mountain town south of here, fill with hundreds of women from surrounding villages, many tugging along children by the hand or carrying infants slung at their waists in rebozos. They come in by bus or foot and gather in the cool shadows of the municipal auditorium, where government workers sit at tables on the stage, ready to hand out cash.”

These are not your normal welfare lines, however. Women who come into town for their payments (and 97 percent of Oportunidades recipients are women) have to meet a strict set of criteria aimed at improving their lives and the lives of their children. As Rosenberg correctly labeled it, Oportunidades is bribery for the poor for changing their lifestyles. As Rivera explains:

“If the women and their children have kept all their medical appointments, and if their children have stayed in school, the money is theirs to use as they wish. The awards range from 360 to 3,710 pesos (about $36 to $370), enough to buy food or shoes or other necessities. The size of the award depends on how many children they have and what level of school the children are in. The program is 10 years old, has a budget of more than $3 billion a year and covers almost a quarter of all Mexicans. … To qualify, people must be in extreme poverty, roughly defined by officials here as living on less than the equivalent of $2 a day. The payments are tied to changes in behavior intended to lift families out of poverty. So the program requires families to keep their children in school and take them for regular checkups. Parents must also attend talks on health, nutrition and family planning. In addition, pregnant women, infants and breast-feeding mothers receive an iron-fortified supplement to ward off malnutrition. They also receive small grants to offset the cost of school uniforms and supplies, but many of the women in Tepoztlán said the school grants are not enough to cover the extra costs.”

Welfare reforms in the United States have concentrated on getting people to work and off the dole; whereas Oportunidades focuses on improving the future work force. That is both a strength and weakness of the program. One of the principal architects of the program, Santiago Levy, who helped implement it in Mexico City under the name Progresa, said:

“Progresa is a program to improve human capital; it is not a jobs-creation program.”

Jobs, however, are necessary for bringing any population out of poverty. Which approach is best (job creation or human capital development) turns quickly into a chicken-and-egg debate. You can’t attract the kind of jobs necessary to create a middle class without having an attractive work force (educated, healthy, and hardworking) for employers. Hence, Oportunidades needs to be complemented by a jobs creation program. A fact that Levy readily acknowledges:

“Oportunidades will never cure poverty in Mexico without major reforms to the country’s labor market, Mr. Levy said. Still, he credits the program as one of two major reasons poverty has declined, the other being money sent home from Mexican workers in the north.”

The program requires, but does not yet have, the cooperation of businesses. Women complain that they cannot get time off from their jobs to take their children to mandatory doctor’s appointments or to travel to the distribution centers to receive their payments. The latter problem could be reduced if funds distribution could be taken to the poor instead of having the poor travel to distant distribution points. Program administrators, however, point out that there is an upside of such travel.

“As for the time-consuming gatherings, academics have also found value in that. In addition to chatting and gossiping, the women also encourage one another. ‘They become social gatherings and help shift norms,’ said J. Lawrence Aber, a professor of applied psychology and public policy at New York University, who was part of the mayor’s poverty commission that pushed for New York to adopt the program. ‘It’s a form of social capital.”

I have argued before that the Development-in-a-Box™ approach, because it is standards-based, can work as well in the developed world as in the developing world. Michael Bloomberg apparently agrees that poverty and the approaches to overcoming it are in some measure universal. He plans on implementing a version of Oportunidades in New York City this fall.

“Under the New York plan, which is still being developed, poor families would be paid up to $5,000 a year to meet goals like attending parent-teacher conferences, getting regular medical checkups and holding down a full-time job. Participants would get their money through automatic deposits, not by attending a large gathering. A pilot program is scheduled to begin in September with 2,500 randomly selected families whose progress will be measured against 2,500 families who will not receive the benefits. The pilot program will be privately financed. The city has already raised $42 million of the $50 million needed to cover the initial costs. If it is successful, Mr. Bloomberg hopes that public money will eventually go into it. But there is still a question of how a rural program will translate into an urban setting. Mexico began expanding the program into smaller cities only in 2001, and into larger metropolitan areas in 2004. Mexico City was one of the last areas in the country to get the program. In 2006, only about 18,300 residents there were receiving benefits, according to the program’s statistics. The mayor of Mexico City, Marcelo Ebrard, has been a strong critic of the program, saying that it is too conservative and that at the pace with which it is expanding, it would take two generations to help his city’s worst off.”

Mayor Bloomberg understands the program may not achieve the success he hopes it will, but he insists that if it fails it won’t be from lack of trying. The fact that he has solicited private support for the experimental program is commendable. It creates more stakeholders and a larger community of practice than if the program were confined to traditional social service networks.