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The Ladder

A Blog from New America's Asset Building Program

Conditional Cash Transfers in the United States: Maybe They Can Work After All

Published:  April 14, 2010

NYC Mayor Bloomberg’s Conditional Cash Transfer (CCT) program, Opportunity NYC, has come under fire lately. The program—which rewards low-income families for engaging in certain positive behaviors—recently published preliminary results, and critics claim initial findings show that CCTs do not work in the U.S.

But how closely are we examining data? Megan Cottrell blogging on trueslant.com cautions us against dismissing this project as ineffective and highlights study results demonstrating that families who participated in the program were more likely to have a bank account, increase their savings, and less likely than control group participants to use alternative financial services such as check cashers.

 This is an important finding for the asset building community and for low-income families. Something as seemingly simple as having a bank account might not appear news-worthy to many people, but with the numbers of unbanked and underbanked Americans reaching at least 30 million—and climbing even higher during the recession—the findings from this study are certainly worth applauding.

Recent research shows that families who use banks rather than alternative financial services for their basic financial needs save money in the long term. Furthermore, savings helps families weather periods of economic uncertainty or financial need and having savings is also associated with upward economic mobility.

Couple these findings with the fact that CCT programs in other countries have demonstrated stronger positive results and that additional CCT pilot studies are being launched in the U.S. and the critique of Opportunity NYC’s initial findings seems a bit hasty. Perhaps we need to give Opportunity NYC a little longer to get off the ground before we start dismissing its potential effectiveness as a poverty reduction tool in the United States.

The full report by MDRC analysts of initial program results can be found here. 

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