What Dollar Bills Can't Buy

Jonathan Rauch | November 13, 1999

Until this year, Al Gore was a clone of Bill Bradley, or vice versa. Primary campaigns, however, have a wonderful way of sharpening differences. Last month, Gore and Bradley unveiled their plans to reduce child poverty. In many respects, their prescriptions overlap; both, for instance, increase the minimum wage and the earned income tax credit (a subsidy for low-wage workers). But look at the differences.

Bradley's proposal is comprehensive, ambitious, and expensive ($10 billion in the first year, more after that). Gore's is piecemeal, cautious, and cheap. Bradley emphasizes wage subsidies and child care assistance and early-childhood education; Gore emphasizes cracking down on deadbeat fathers. And here's something interesting: Gore says his plan "will strengthen families, reduce child poverty, and promote responsible fatherhood." Look what's first on the list: families, not poverty. Bradley, by contrast, sounds like an escapee from the Johnson Administration (Lyndon, not Andrew). "At a time of great prosperity, I believe we have the wealth to eliminate child poverty as we know it," he says. "At a time of all sorts of new technologies, I believe we have the methods. The question is, do we have the will?"

If the public pays attention, it may notice that Gore and Bradley have just reopened one of the most genuinely fundamental debates in all of public policy. Are the poor the same as you and me, only poorer? Do they mainly need money? Or do they need something else?

Bill Bradley, meet Susan Mayer. In 1976, a divorce left her single and struggling to support a 6-year-old son. "I entered a period of very irregular, unpredictable low income," she says. "I wasn't sure if next month I was going to be able to pay the rent." Later, in the 1980s, she entered graduate school, in sociology, at Northwestern University. She also remarried--comfortably--and in 1986 her second child, a daughter, was born. Her daughter, unlike her son, grew up with all the good things money can buy.

Today Mayer is an associate professor at the University of Chicago and is the director of Northwestern and Chicago's Joint Center for Poverty Research. Both of her children are thriving, which makes her wonder. "I look at my two kids and I say to myself, `Boy, they're both good kids, they're both successful, they both went to college. It couldn't have been just money. I couldn't afford to buy my son nearly what I could afford to buy my daughter.'" Mayer's life thus framed the question that became her life's work.

"I wanted to do a mental experiment," she says. "If you just flew an airplane over families and dropped money on them, would their kids turn out better? I really wanted to get at the question of whether income per se improves kids' life chances. There were many, many studies that had shown a correlation between the effect of parental income and children's outcomes, and they all showed that poor kids do worse than rich kids. For me, the question was why. And could we make poor kids like rich kids--or middle-class kids, more realistically--if we transferred money to them without strings attached?"

When she began her research, Mayer expected to quantify the obvious: "I was pretty certain I was going to find that income has a sizable effect." She was surprised. So were some anti-poverty activists, who, she says, have pilloried her. The academics I spoke with, though, regard her work as innovative and important. It was published in her 1997 book, What Money Can't Buy: Family Income and Children's Life Chances.

What makes Mayer's work interesting is not so much the result as the novel way she gets there. Or, rather, ways. Low incomes go hand in hand with many other problems: lack of skills, poor education, social isolation, bad neighborhoods, emotional and mental illness, addiction, on and on. Is lack of money the cause of the other problems, or just an effect? Isolating the effect of money turns out to be an extremely knotty problem. Few scholars had even tried, and no single test could manage it.

So Mayer tried five tests, each quite different from the others, and compared the results. More revealing than any one result was that all pointed in the same direction. Money, in and of itself, didn't seem to make much difference in predicting children's success.

The most ingenious test is also the hardest to explain, but bear with me. Mayer wondered whether there is a link between parents' income in the future and their children's success or failure today. This sounds odd, but it's logical. Income received years from now cannot directly influence children's lives today. Yet--odder still--Mayer found a strong correlation. On almost a dozen measures of children's well-being, she says, "the effect of future income is very similar to the effect of current income."

Take two girls from different families, Patty and Caitlyn. Both are poor in 1990, when they're 17. But nine years later, in 1999, Patty's parents are still poor, whereas Caitlyn's parents are comfortably middle-class. It turns out that Caitlyn's parents' success in 1999 retroactively "predicts" that, in 1990, Caitlyn is much less likely to drop out of school and get pregnant (for instance) than Patty.

How can that be? Is Caitlyn clairvoyant? No. Presumably, her parents are doing something right--something that keeps their daughter on track in 1990 and that also improves their own chances of escaping poverty later on. Mayer says: "The parents who have the--let's call it, for now, competencies, in a nonjudgmental sense--to be successful later are the same parents who have the competencies to raise a child well, even when their income is low."

Mayer goes on to perform a series of other tests. For instance, she looks at families that receive income from sources other than work or welfare: gifts, for instance. She found that receiving windfalls--money from airplanes, as it were--has very little effect on children's success, whereas income from work has a large positive effect. "That suggests to me that it's not really the money per se," she says, "but the characteristics of how people get money."

Then she looks at national statistics. From 1969-89, the rich grew richer and the poor grew poorer. If money were the main thing that mattered, then over that period the children of the rich should have done better on various measures of success, while children of the poor should have done worse. In fact, however, Mayer finds not much of a relationship. Then she performs a couple of other tests. The general result is always the same: Additional money doesn't have much effect on children. The key word there is "additional." "I wouldn't want people to conclude that income per se has no effect on child welfare," Mayer says. "My argument is that the reason these effects are small is that we already have a substantial amount of income transfer. Even most poor families can meet their most basic material standards of living. And when families can do that, then additional money doesn't buy that much more."

In essence, Mayer is saying not that income transfers have failed, but that they have succeeded. Poverty today means not one simple thing--lack of money--but many complicated things: low cognitive skills, depression, lack of transportation, you name it. "There are all different kinds of poor person," Mayer says. "So thinking that there's going to be one big national policy that does X and solves the problem just isn't the way to think about it."