For Brazil’s poor, systemic poverty, inequity, and corruption shape the landscape of the country. Even the picturesque beaches of Rio de Janeiro offer high-rise luxury apartments that sit neatly across from dilapidated slums in an ironic homage to a country holding some of the highest rates of economic inequality in the world. The fight to bridge this inequality gap has been marred by lethargic bureaucracy and a stalling economic growth rate, but even with a lagging economy and increasing political unrest, Bolsa Familia, Brazil’s foremost poverty alleviation program, has consistently garnered enough support to continue and even expand.
With roots tracing back to a few Brazilian municipalities in 1995, Bolsa Familia (“Family Purse”) has quickly become one of the largest conditional cash transfer programs in the world, reaching around 50 million citizens, roughly 25 percent of the country’s population (Brazil Ministry of Social Development). The program targets families with children earning incomes that usually range between $18 to $45 a month. Each family receives roughly $13 to $19 per child (depending on the child’s age) in exchange for ensuring that he or she attends school and receives regular medical checkups.
Although that amount of money may appear inconsequential, it can often double the monthly income of a family, providing extra funds for food, school supplies, and other necessities. Often characterized as temporary and paternalistic, giving money directly to the poor has historically been viewed as a deceptively simple solution, but the basic intuition fits well within the framework of traditional microeconomic theory.
For families with budgets that often amount to less than $2 per day, decisions about education, healthcare, and nutrition are heavily constrained by an inadequate budget and a lack of access to proper information about these topics. For wealthier families, an awareness of the returns from education and sufficient income makes sending children to school a near universal decision. But for poorer families, the alternative to generate more income through child labor, the expenses of school text books and uniforms, and misinformation on the returns of education may shift many families away from sending their children to school (see graph below displaying how budgets shift based on a household’s participation in Bolsa Familia or child labor). Similar trends can be seen in healthcare. Many impoverished children go without proper preventative care simply because even small expenses that protect against future financial burdens can be an imposing expense to the daily budgets of the poor (Lindert 2005).
Bolsa Familia aims to improve these outcomes by giving families enough money to ensure that their income doesn’t fall into a poverty trap, where they may have economic incentives to make decisions that will perpetuate traditional symptoms of systemic poverty: malnourishment, disease, and under-education. Because the program does not stipulate how the money is spent, it can be put toward the unique set of expenses each family faces, with the intent of creating an efficient and dynamic system that molds to individual household needs in education, healthcare, and nutrition.
The primary goal of the program lies in immediate poverty relief, but an additional long-term benefit could potentially be a reduction of economic inequality due to increased social mobility among these vulnerable groups. Initial findings seem to confirm this, as a recent World Bank evaluation of Bolsa Familia stated “Although the program is relatively young, some results are already apparent, including: (…) contributions to improved education outcomes, and impacts on children’s growth, food consumption, and diet quality.” Possibly the most affirming measure of Bolsa Familia is the poverty headcount of Brazil that fell from 22 percent to 7 percent from 2003 to 2009, giving Brazil one of the fastest rates of decreasing poverty headcount, and tangentially, economic inequality in the world. And while measuring the success of these large-scale poverty alleviation programs is notoriously difficult, let alone drawing causal inference, Bolsa Familia is not the only global data point on the effects of widespread cash transfers.
A significant precursor can be found in Mexico, where a program named Progresa (now called Oportunidades) was founded with similar goals and requirements. Oportunidades’ commitment to rigorous impact assessment has yielded positive evaluations, one notably from the International Food Policy Research Institute (IFPRI) who stated “Mexican children living in rural areas where Oportunidades operates have increased their school enrollment, have more balanced diets, are receiving more medical attention, and are learning that the future can be very different from the past. Beyond Mexico and Brazil, over 40 countries have begun implementing similar programs that will hopefully allow governments to make more informed policy decisions in the long run (Gladstone 2015).
Even with a strong support base, the program has drawn both domestic and international criticism. Some Brazilians feel that the program is bloated and costly, while hoping the government would spend more on other development needs such as revitalizing the country’s outdated infrastructure or investing more in education. Conservative voters often call the program an attempt of Brazil’s left-leaning Worker’s Party to buy the votes of the poor, essentially manipulating their poverty for political gain. The 2014 general election further exhibited that divergence in opinion tends to be geographically stratified, with conservative-leaning Southern states more likely to oppose Bolsa Familia, while Northern states are nearly universally supportive.
International critics are often more concerned with moral implications, tending to believe that the transfers will foster a sense of dependency or discourage the search for formal employment. For development economists, a fierce ideological debate still surrounds whether cash transfers should be unconditional or tied to certain requirements, such as school attendance or mandatory medical checkups. Proponents of unconditional transfers point out that a recipient may use the money to fulfill their exact needs, without the nudges of aid organizations or governments assuming they know what is best for the poor. Opponents counter that these nudges are often necessary to combat the lack of information that many poor families face, along with providing a defined structure as to how exactly the transfers will fight poverty. Bolsa Familia acts as a conditional cash transfer, where receiving the funds is contingent upon meeting certain requirements, but the use of that money is at the discretion of the family.
Even amidst severe recession and a declining currency the Minister of Social Development Tereza Campello confidently defends the government’s decision to continue the advancement of Bolsa Familia without budget cuts, saying, “We do not want to take away Bolsa Familia, instead we want to bring the children back to school because when studying they are not subjects to crime and child labor. The whole family wants what is best for their children, they want health and education.”
For now, Brazil will continue moving forward experimenting with one of the largest conditional cash transfer programs in the world. At the cost of roughly $115 billion dollars (about .5 percent of Brazil’s GDP) annually, supporters view it as a poverty alleviation bargain, while critics view it as another costly, inefficient government program. But for the rest of the world watching, the grand poverty experiment brings us one example closer to a better understanding of the effects of cash transfers and their role in shaping policy.
“Bolsa Família Melhorou a Vida De Mais De 604 Mil Lares Brasileiros Em 2015.” Portal Brasil.
Ministerio Desenvolvimento Social, 11 Apr. 2016. Web. 14 Apr. 2016.
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