Sergio Daga policy analyst from the Heritage Foundation answers the NCID questions about his current and future research.

Why did you decide to focus your research on the Conditional Cash Transfers (CCT) programs?

CCT has been called “the new way for social programs” in Latin America and the reason why I decided to explain a little bit more about this issue is because in Bolivia, where I am from, CCT programs are very aggressive in media and are very popular. I and a friend wanted to investigate and analyze whether or not these programs are doing what they are supposed to be doing? Are these programs helping people lifting out of poverty? We have found not only in Bolivia but in most of the countries that utilization of health and educational services has increased indeed, but, these programs are not creating human capital development.

There are 3 reasons. First, these programs have not been concentrated on the supply side, the quality of the services education and health are still in bad shape in Latin America.

Second, we have a huge problem of bad incentives as a result of these programs. First the amount transferred sometimes is so important and so determinant on their income in these families that they decided not to work or work less hours.

Third, there is a dependency created between the income and the voters [in terms of short-term political gain]

Overall do you think that these CCT programs are effective?

They have not been effective at lifting people out of poverty in a sustainable way. I think they have been effective on giving people incentives to use these services more but not achieving a long-term goal which is human capital development.

To achieve this in a sustainable way you have to concentrate on the like rule of law, limiting government intervention – and it doesn’t mean more or less intervention but better intervention –, open markets, fighting against corruption and fighting against the perception of investor protection. You need to have a good institutional environment in order to have good social policies. If you don’t work on this area first you might not have long-term goals achievement.

Do you have any other topic in your mind to focus on for your next research?

One of the goals that we have in the short term is to do some research about the behavior of these people once they receive the money. Are they using it as an investment or are they using it as consumption? What do they do with the money? And I would like to try to connect these with the investment and with the financial services.