Wednesday, 5 May 2010

It ain’t what you do…

After exhaustive discussions at the UN you know what you want to measure to represent child well-being. You have even convinced your government to maintain spending on children at pre-crisis levels.

Well done you! But you can’t go home and celebrate because people are now bothering you about the bit in the middle. You need to address the dreaded ‘how’ question.

In a desperate bid to make it out of the office you ask “why is this ‘how’ important?” The answer you expect is given… “Your problem is that you are advocating for changes in ‘spending’ without understanding the what, how and why of the interaction with ‘outcomes’. You lack detailed recommendations for informing how changes can be made to your outcome measure, blah, blah, blah”…

Dejected, off you go to contemplate this problem (fearful that somewhere Prof. Goodhart will be wringing his hands).

It is likely some countries get more “value” for their money, some systems are more efficient. Two countries spending the same amount of money may not achieve the same well-being outcomes… so how do you unpick the link between spending and well-being?

To address this question we need a working example of inputs to outcomes: family cash benefits / tax breaks and child poverty will do. Although child poverty is also affected by policies to help families work (childcare), and other services such as free school meals, the idea that by giving someone money - or reducing the taxes they pay - will free up disposable income is not a great leap. So stay with me!

We also need an analytical frame, for this we can turn to reasonably well known 80s hit song. Allow me to paraphrase: ‘in order to get results, it is not what is done per se, but rather the methods, timing and place of your intervention that matter’. Unfortunately there wasn’t much more to glean from Bananarama’s sojourn into system analysis, but at least we have a starting point from which to consider different policy approaches across the OECD.

It’s the way that you do it… Family cash benefits in the OECD fall into two categories: targeted schemes and universal schemes. Targeted systems focus transfers to parents in most need, often with a range of conditions. If, for instance, work is a condition, what do we do about those who cannot work because of illness, where work may have negative effects for the child, or where work is simply not available? If work is not a condition, concerns arise about high payments removing incentives for parents to work, or trapping them in benefits. Means-testing can also lead to some kids missing out if parents are put-off by the application process because of inflexibility or complexity. On the other hand, universal transfers provide money to parents of all children, giving money to many who don’t need it, and limiting the impact on relative child poverty - that said this is one way to try and ensure at least some money is always designated as child money.

It’s the time that you do it… Some OECD countries (e.g. Belgium, The Netherlands) provide more for cash benefits to families as children age some (fewer) reduce support payments (Denmark for instance). Some OECD countries (e.g. Ireland) pay the same amount of money to a family regardless of whether the child is aged one or 18 years old. Some can support families if children are out-of-school but training (the UK), others, like Germany, prefer the Higher Education incentive, and pay for children attending university. With child poverty outcomes on your mind, you should ask: Do older children (12 to 17) cost more than younger children (0 to 6)? Perhaps directly in terms of clothes and food, but evidence suggests young children cost the most overall. The big cost of being time spent caring by parents, which reduces earning or leisure time.

It’s the place that you do it… There are some geographic considerations in some OECD countries when paying child benefits: in Norway children living in the Arctic region get some more money, federal states and cantons can pay benefits at different rates. In some countries families can claim if the child is living abroad (in the EU mainly), in others they have to be living with their parents to get a benefit (some can be at University).

It ain’t what you do?… well sometimes it is, at least at the family level spending matters. Indeed family benefits paid for children can be as high or low relative to other forms of assistance or indeed average earnings. Family size variations also make a difference – countries can increase or reduce increments per child as families grow. For an entirely unscientific example, Euro Disney’s Donald Duck (under the French system) gets relatively more under Allocations Familiales for Riri, Fifi and Loulou than Florida Donald whose increments in Earned Income Tax Credits for Huey, Duey and Luey are substantially reduced as for the third pesky nephew in his charge (we should assume the families have a similar number of bills).

All OECD member countries support children in different ways to achieve similar goals, and they all want to do it better. The examples above, limited though they are, can all impact on how far their cash benefit dollars go. To complicate things further, cash benefits are clearly not the only policy lever - they interact with other benefits and taxes (such as child care support to help labour market access) to address problems like child poverty. Nonetheless these complications are no excuse for resisting progress, if things are not working as you would like them to, at what point should you say “this tool has done all it can, now to revisit and refine”.

Though not as catchy as the lyrics in that 80s hit single, a slightly amended ‘progress’ version might be – it is what you do, and the way that you do it, how you assess it, and then how well you implement the necessary changes… Perhaps that’s what gets results…

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