PRIZES FOR POVERTY. The Wall Street Journal has an interesting report on the anti-poverty innovation sweeping the nation: Prizes. According to the paper, "[i]ncentive-based programs have sprung up in recent years in large part because they are more politically palatable than traditional welfare benefits, and because advocates say such programs offer a better chance of changing some of the behaviors tied up with poverty. But incentives aren't safety nets. And even if they work for specific tasks, it's not clear whether they are enough to prompt meaningful long-term changes in those most firmly entrenched in poverty." The incentives in question work much like the magazine subscription contests you participated in as a kid: attend PTA meetings, get points; cut down school absences, get points; pay your rent, get points. Eventually, you can redeem your points for cool prizes like a DVD player. It's skiball mixed with the Puritan work ethic. Which is not to say it's a bad program, particularly for the kids, who're getting the same incentives that so many wealthier parents offer their children -- net some A's, receive a gift. One parent enthused that "I usually have a problem getting [my son] to do his homework, but now he does it on his own. He's trying to get a PlayStation." Back in the upper-middle class suburb where I was raised, I knew no small number of families taking exactly that approach to educational motivation. That said, these programs are nibbling rather pathetically around the edges. If such minor rewards work, that's proof that the current job market isn't sufficiently compensating employment to incentivize good economic behavior. Which should be no surprise. The minimum wage is at a 54-year low against the average wage and the Earned Income Tax Credit needs a boost, but health costs, fuel prices, and more sundry items such as parking tickets (which some participants are using their points to pay off) have shown no similar stagnation. So while an achievement ceremony and a DVD player are worthwhile, they don't fix the structural problems of an economy that doesn't do enough to facilitate or reward work.
--Ezra Klein
