Investments, Time Preferences, and Public Transfers Paid to Women
When women receive public assistance payments, they channel resources to benefit all household members, particularly children.
Prior research suggests that often when given choices involving investment, goods, and allocation of resources, men and women make different choices, with women tending to invest in resources that will benefit their children’s or their own well-being. Much of this research, however, has been conducted in specific populations that are difficult to consider generalizable. To extend this research to a larger group, this study examines women’s purchasing choices within the controlled setting of a government-run welfare program. PROGRESA, an ambitious anti-poverty initiative launched by the Mexican government in 1997, provided generous cash transfers, amounting to a little over a quarter of total monthly household spending, to poor rural households. This financial assistance was provided directly to the female head-of-household if at all possible, namely a woman in the home with children who met age criteria for the program. If no woman qualified in a household, the stipend would be given to a man. The program operates on the idea that if given a stipend directly, women will devote that money to their children’s future and well being, while lessening their families’ poverty. This study evaluates PROGRESA’s premise, seeking to identify the effect of women controlling a greater share of household income.
Among poor rural Mexicans enrolled in the PROGRESA program, women allocated household resources toward investments that yielded future benefits, including children’s health and education, and livestock. In the study sites, smaller livestock used for sustenance- such as pigs and poultry- are traditionally cared for by women, and the ownership of such can act as a substitute for savings, which may increase women’s financial stability and bargaining power within the household.
- Households in the PROGRESA program, or treatment group, received about 30 extra pesos per month. Those receiving this assistance spent approximately 15 pesos more per month than members of the control group, and were able to save approximately 13 pesos per capita per month more than their control counterparts.
- Households in the PROGRESA treatment group owned more livestock, including larger, income-generating animals- like cattle, donkeys, and horses- that are traditionally cared for by men, as well as smaller female-tended livestock. Of note, treatment households owned .36 more poultry and .1 more cows than control households, on average. Researchers attributed approximately 70% of the treatment group’s ability to accrue savings to this increased ownership in livestock. Households participating in PROGRESA consume nearly 100 more calories per day- in the form of nutrient-rich foods- than control households, devoting more of their food budgets toward meat and vegetables, and less to tortillas and beans than prior to the intervention.
- PROGRESA’s effects were only statistically significant in households headed by a couple. In homes with only one head-of-household, PROGRESA income was treated as any other income source, and had no impact on budget allocations or investments in livestock. For dual-headed households, the results suggest that PROGESA was associated with an increase in women’s bargaining power over allocation of resources.
- Though proportionally, the same amount of household budget is spent on schooling in both treatment and control groups, the treatment group spends slightly more on schooling given their larger overall budget. Additionally, treatment households spent 2.5 more pesos a month on children’s clothing than control households.
- To measure patience involving investments over time, a survey was administered to both men and women in these communities, and women were found to be more patient, which in part explains the future-oriented expenditures of women.
In short, in dual-headed households, PROGRESA benefits increase women’s bargaining power. They can then leverage this power to distribute wealth toward investments with the greatest long-term benefits.
PROGRESA eligibility was determined by whether a household was based in a poor community and whether the household itself fell below a multidimensional poverty line. For the evaluation sample, 506 communities in seven Mexican states were selected. On the basis of census data for more than 24,000 households in PROGRESA’s evaluation sample, communities were collected into groups of three based on poverty level and economic development. By random selection, two communities from each triad were placed in the treatment arm, and one was placed in the control arm. About 50 percent of households in treatment communities qualified for PROGRESA. The eligible households in treatment communities started receiving PROGRESA benefits immediately in 1997, while the rest of the communities were to be enrolled three years later. A total of 22,882 households were evaluated in this study.
After the initial census, subsequent surveys were administered to households in both groups semi-yearly for the next three years. These surveys included information on spending, income, and existing wealth. To examine preferences for long-term investment and behaviors related to money and time, data was taken from the Mexican Family Life Survey, a longitudinal survey of Mexican households. In this survey, 5,230 people of both genders were given choices in a hypothetical lottery payout in which waiting longer for the money would garner a higher award. Based on responses, women were found to be more patient, which is correlated with their allocation of PROGRESA benefits.
Regression analysis was used to ensure statistical significance.
It is important to note that the PROGRESA program provides incentives for education, access to health clinics, food supplement, and nutritional information, which could influence households shifting resources to improve long-term benefits.