Where hard evidence should count

Some criticisms of the conditional cash transfer (CCT) program actually provide good arguments for continuing it. That is, they raise valid questions best answered with empirical evidence that can only become available if the program is given a chance to run for a good length of time.

Given the huge investment the Aquino administration is prepared to make in this social protection program—P39 billion in 2012; P306 billion for the period 2012 to 2016—it is reasonable to demand that the Pantawid Pamilyang Pilipino Program (4Ps) be continuously examined and systematically monitored and evaluated.

Debates on the 4Ps unfortunately have been mostly argumentative and speculative. Legislators have argued for spending the tax pesos allocated for CCT on building more classrooms, buying more textbooks and training teachers instead. While the argument makes a lot of sense, the determination of which is the better use of our tax pesos is helped more by sound economic analysis than by provocative sound bytes and privilege speeches, or by the results of opinion polls. Our policy debates consist mainly in exchanging opinions; rarely are hard evidences offered.

One common criticism of the cash grants based on anecdotal evidence points to the possibility that the recipients use the extra money for gambling and other vices. There are conceivably parents who would use the extra money to gamble or to buy cigarettes or alcohol. But how big a percentage of the enrolled households would they be? One could counterpose that the majority of parents would likely use their cash grants to buy food, or medicines if someone in the family became sick, or to pay for water and electricity, which would all serve the program’s goal of improving children’s nutrition, health and academic performance. But this too would only be speculative without hard evidence. In the end this is a debate that neither side can win through speculative argumentation.

Yet if evidence were to be collected, it just might show that some of the money did go to unintended uses, but that a bigger part went to increasing the welfare of members of the households enrolled in the program. This is the evidence coming from countries that have implemented their own version of the CCT.  In Mexico, when the first CCT program, then called Progresa, was evaluated after its initial years of implementation, it was found that on the average 70 percent of the extra money households gained from the cash grants went to increasing the quantity and quality of their food. This in turn contributed to improvements in the health of children enrolled in the program and a decrease in the number of days that adult members of enrolled households became ill. Among the enrolled children, there was a 23 percent reduction in illness, an 18 percent decline in the incidence of  anemia and a 1 to 4 percent increase in height.

When the second version of the CCT, the Oportunidades Program, started in Mexico in 2000, 5 out of 10 children in poverty finished elementary. By 2008, 7 out of 10 completed primary schooling.  The incidence of  anemia among beneficiary children under two years old declined from 61 to 35 percent. These were the incontrovertible results after eight years—not a hundred percent success rate but the improvements were palpable and significant.

Confronted with these results, our policymakers can ask themselves two questions: First, what other programs have been shown to have produced the same or better results and how much did they cost the government? This question should lead to an answer as to whether there are better means for achieving the same outcomes. Second, how much value do the policymakers and the citizenry, whom the politicians represent, place on these improvements in human capital? This question basically asks if human capital is highly valued or only moderately valued as a social good relative to other “common goods” (such as a reduction in the national debt). Is the demonstrated 18 percent reduction in the incidence of anemia among children more or less valuable than, say, a 2-percent reduction in the national debt?  What other common goods are more highly valued?

The favorable results of the CCT in other countries cannot automatically be expected in the Philippines, given differences in the program design, the incentive structure, and implementation-related variables. For one thing, in the Philippine version, the provision of cash grants to a beneficiary household has a limit of five years, whereas in some countries, the cash grants continue for a family which has a child in school until that child finishes high school. This major difference would likely spell a significant difference in outcomes that should be worth studying. There precisely lies the opportunity for subjecting the program to rigorous monitoring and evaluation to see where and how its design and processes can still be improved.

There are state-of-the-art and tested methodologies that can help implementers not only evaluate the outcomes of a program but also determine which aspects of the program’s design and/or processes can be tweaked to gain better results. One that has been applied to anti-poverty programs like the CCT makes use of randomized control trials (RCTs). A study using RCTs showed that by adjusting the timing of distribution of the cash grants, school absences became fewer by 12 to 26 percent, an improvement achieved without additional cost.

It is time to move the debate on the CCT towards looking for ways of improving the delivery of benefits and outcomes by relying on hard evidence. But we can only move forward if we decide that investing in human capital is where we want our  money to go.