How to Fight Poverty: 8 Programs That Work #4
In 1995, the Mexican peso crashed and the economy contracted by 6 percent. At the time, Santiago Levy, the deputy finance minister, realized that the country's antipoverty programs were going to fail its poor. The programs were a hodgepodge of food subsidies, adopted in response to powerful food producers. They were inefficient because they targeted foods everyone ate, rich and poor. Some even targeted foods the poor don't eat, such as bread – poor Mexicans eat tortillas.
Mr. Levy saw a looming disaster – but also an opportunity to build political support for an antipoverty program that worked. Stealthily, he organized a pilot project to test a new idea in Campeche, far away from the capital so it would draw little notice. He began a program to pay poor mothers to keep their children in school and take their kids to the health clinic. He compared the results to poverty figures in a group of similar villages without the program. It was a great success. Data in hand, he persuaded President Ernesto Zedillo to phase in the new program and phase out the food subsidies.
Oportunidades, formerly called Progresa, is now embraced by all parties in Mexico and, with financing from the World Bank, is helping virtually every poor family. It not only focuses antipoverty spending on those who really need it, it does so in a way that encourages families to break the cycle of poverty for their children.
The average family in Oportunidades gets $35 a month – about a quarter of the rural family income. Families with many children in school can get up to $153 a month, a ceiling imposed to avoid providing incentive to have more children.
From the beginning, Oportunidades built in rigorous evaluation. Those studies have shown that it does focus its help on Mexico's poorest people, and that the money is producing good results. Children are bigger and healthier. Oportunidades has also cut child labor and led to more schooling – in rural areas, for example, the number of children starting high school increased 85 percent. Moreover, by paying women, Oportunidades has augmented their power inside the family without increasing domestic violence.
There are fashions in foreign aid, and Oportunidades is hot. The World Bank sings its praises (pdf). So far 25 countries have adopted some version. New York mayor Michael Bloomberg just announced he is looking for donors to finance a pilot program to test whether New Yorkers, too, can be bribed out of poverty.
Credit: NYtimes,
By TINA ROSENBERG