Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
THE POVERTY MEASURE AND AFDC 349 number of foreign immigrants into the United States may be affected differently by this issue than are native-born U.S. residents. Summary Overall, it is clear that cash and near-cash assistance programs have negative effects on such behaviors as work effort, although the effects may often be small. These incentive effects can cause a disjuncture between measured need and the amount of assistance program dollars required to alleviate that need. That is, if people who are provided benefits that are intended to move them out of poverty respond in such ways as working less, the net effect will be to leave them in poverty and to require even more funds to move them out of poverty. Because of such behavioral effects, it is misleading to describe the aggregate "poverty gap" (i.e., the difference between the poverty line and a family's resources, aggregated over all families) as the dollar amount that the government would have to spend to eliminate poverty. Because of behavioral responses, an expenditure that should decrease the poverty gap to zero will almost surely fall short. Moreover, the incentive problem is even broader in that program benefits (whether from public assistance programs or social insurance programs, such as unemployment compensation) may lead to reduced work by beneficiaries, even though the poverty gap or other poverty statistic is not affected. Yet a decision not to provide any type of assistance because there may be some undesired behavioral responses on the part of some program participants is extreme. Such programs as AFDC have their success stories as well as their problems, and, as noted above, behavioral effects, when present, are often small. More fundamentally, there are groups in needâsuch as childrenâwho are not responsible for their situations but who will suffer if benefits are curtailed. A program designer, then, faces the very difficult task of specifying benefit levels and other program provisions so as to assist needy people but in a manner that does not encourage behaviors that increase program costs or may otherwise be viewed as dysfunctional and, if possible, that encourages functional behaviors. The task is made more difficult by the fact that research findings on incentive effects are often incomplete or inconclusive.9 There is also the problem that other aspects of the environment may undercut efforts to provide incentives for increased self-support: for example, there may not be jobs available in the private sector for welfare recipients. Issues of program incentives have been at the center of policy debate for AFDC, which is directed to families whom the public would like to see increasingly responsible for their own support. Consequently, there has been considerable experimentation with changes in benefit levels and formulas for 9 Indeed, as Citro and Hanushek (1991) note, a major weakness of models that policy analysts use to estimate the likely effects of changes in benefit levels and others features of program design is that the models are not able to properly account for behavioral responses.
