16 July 2018

Could paying kids to go to school be the best way to reduce child poverty?


Think back to the rare summer days you spent as a child poring over your imminently-due homework. Perhaps the fundamental importance of education was enough to make you get on with it, but for some children thoughts of colouring or football (or anything else) are more compelling than the seemingly far-away benefits of schoolwork.

This phenomenon is called hyperbolic-discounting – it is why that low-carb vegan salad looks better tomorrow than it does in your lunch break. We all, in some way, place a greater weighting on present satisfaction than long term gains.

When it comes to education, it can take time for a child to appreciate the value of school. According to the Joseph Rowntree Foundation, a good education and supportive family environment, particularly in early childhood, can significantly increase the life chances of someone born into poverty in the UK. According to the LINDA model, if all children achieved five or more A-C GCSEs, there would be 110,000 fewer people in absolute poverty in 2030 and 540,000 fewer in 2040.

Although teaching standards are the most important factor in determining student outcomes, learning is not a one-way street. The level of enthusiasm that a child has towards their studies makes a difference to how well they take in information. Research from the University of California shows that when people are highly curious to learn, they retain specific information as well as irrelevant information for longer. Teachers play a substantial part in motivating their students, but there is another way.

Mathspace, an adaptive training app, has been trialling a new way of incentivising children to regularly use their programme: a conditional cash transfer (CCT). Modelled on the research of behavioural economist Steven Levitt, the programme accounts for students’ need for immediate incentives, and rewards them with $10 upon completing their weekly tasks. As a result, the students are 70% more engaged than those not receiving rewards – they return week on week to improve their maths skills. Job done?

There are many problems with this approach to learning. For one, putting a price on time spent studying is an overly reductive way of conveying the value of education to children. If they are taught to expect compensation for their time, it is unclear whether children will independently keep up their studies without the prospect of a $10 reward.

If a CCT scheme is to be useful in improving educational outcomes, it must encourage a positive attitude towards learning, have persistent effects and be cost-effective.

Instead of paying money directly to the child, Bolsa Família, Brazil’s successful CCT scheme, avoids distorting attitudes towards education by rewarding the mother. Eligible families are paid a flat rate of RS$70 and an additional amount depending on the number of children and their ages. This is all conditional upon evidence of regular school attendance (85%+), children’s vaccination and other activities. The success of the scheme relies on families providing effective support and encouragement to the children.

Independent research suggests that in the first decade of this century CCTs accounted for a third of the reduction in poverty in the country’s six largest cities, with Bolsa Família itself accounting for one sixth. The scheme has been highly effective in tackling absolute poverty in a sustainable way, particularly in speeding up educational progress, benefiting a quarter of Brazil’s total population and only costing 0.5% of GDP (equivalent to 2.5% of Government spending).

Of course, poverty in Brazil entails a different level of deprivation than in the UK: poor British children will not have to miss school to earn money to support their families. Nevertheless, it rankles that in a country as wealthy as the UK poorer children achieve 1.7 grades lower at GCSE than their wealthier peers, and those without qualifications will on average die eight years earlier.

The fiscal case for dealing with this is stark, with research suggesting that child poverty costs the British state at least £29bn per year. So, exploring the use of CCTs may be an effective way of reducing these rates.

A place to start is the Family Rewards programme piloted in areas of the USA. It offered cash assistance to poor families conditional on education, health and work/training outcomes, and included personalised family guidance.

As a result, incomes and graduation rates increased, poverty fell and parents felt more financially secure and reported higher levels of psycho-social wellbeing. Regular motivational interviewing helped families meet goals and receive more awards, increasing their earnings. Those who earned the most from the scheme were more likely to use the rewards to save for some future need, such as college or retirement, and pay for special lessons to help children in school.

However, in hindsight these results were modest. Attendance rates (already high) did not change and effects on income were relatively short-term – 70% of families spent their payments on regular expenses such as rent, utilities or food. Insofar as the temporary CCTs help further educational attainment and develop a supportive family dynamic, they help to reduce poverty. Nevertheless, issues of low earnings and poor teaching standards cannot be addressed with this scheme.

To be truly effective in a country like the UK, CCTs would have to be closely integrated with programmes to improve educational standards. More research should be conducted into their feasibility, but CCTs are a nudge in the right direction.

Sophie Hiscock is an intern at the Centre for Policy Studies.