Karen Macours (Paris School of Economics) Cash Transfers, Behavioral Changes, and the Cognitive Development of Young Children: Evidence from a Randomized Experiment Karen Macours (Paris School of Economics) Norbert Schady (IADB) Renos Vakis (WB)

Introduction Food security and nutrition, in particular for young children, often motivated for it’s importance on cognitive development during early childhood Yet, often early childhood cognitive development outcomes are not measured per se Leads to extrapolation of nutrition (anthropometric) results to cognitive development E.g. debate on critical ages (first 2-3 years of life) for childhood nutrition interventions But we can obtain observable measures of ECD that are standardized (like anthro)

Motivation Cognitive development in early childhood is an important predictor of success throughout life Literature on how nutritional supplements and early childhood stimulation programs affect early childhood development Much less is known about programs that affect investments of parents directly

Motivation Conditional cash transfer programs: Are extremely popular in the developing world (29 countries and counting), especially in Latin America Have been evaluated extensively to assess impacts on school enrollment and attendance, as well as on health service utilization, and nutritional and health status But little evidence available on the impact of cash transfer programs on cognitive and emotional development in early childhood Yet there is an open debate on longer-term returns to human capital acquired through CCTs (achievement, income, ….) We analyzed the impact of the Atención a Crisis program, a conditional cash transfer (CCT) program, on cognitive development outcomes in early childhood in Nicaragua

Outline Intervention Context, data, outcomes Results on ECD outcomes Persistence of effects Transmission mechanisms 3 risk factors for child development Is transfer income used like other sources of income?

Intervention Atención a Crisis program Cash payments to mothers: ~18 percent of pce for median household Social marketing of program: intended to benefit children, encourage dietary diversity Facilitates social interactions on human capital investments Conditions: Schooling Health check-ups for preschool-aged children, but not monitored Objectives: Short-run safety net after a drought shock Facilitate long-term risk management through income diversification Three treatment packages: CCT CCT + vocational training program CCT + productive investment grant

Context, data, outcomes Where? 6 municipalities in rural Nicaragua with high levels of extreme poverty and frequent droughts Who: Households in sample are very poor Average years of schooling: Fathers: 3.5 years Mothers: 4 years 27 percent of children stunted 82 percent live on less than 1 US $ per capita per day

Context, data, outcomes Experimental design Random assignment of 56 communities to “treatment”, 50 “control” Baseline survey: April-May 2005 Proxy means test: households above threshold ineligible (<10 percent of households) 3,000 eligible households in treated communities, 1,000 potentially eligible households in control communities No evidence of significant differences between treated and control households at baseline Households started receiving payments in November 2005: Average household received payments for 9 months Follow-up survey: July-August 2006 Program ended in December 2008 Second follow-up Survey in 2008/09

Context, data, outcomes Attrition Compliance with experimental design Very low levels of attrition: 1.3 percent of households were not re-interviewed in 2006, about 3% in 2008/09 Uncorrelated with treatment Very similar characteristics of full sample of households and households re-interviewed Compliance with experimental design Very high levels of compliance with experimental assignment 95 percent of households assigned to treatment group received transfers Only 1 household in control communities received transfers Of treated households, more than 95 percent received the full amount of the transfer for which they were eligible

Context, data, outcomes Denver Developmental Screening Test: Four subscales (a) Social-personal: social interactions, ability of child to dress and eat on her own, imitate others (b) Language: use of sounds, words, sentences (c) Fine motor skills: manual tasks such as drawing, playing with cubes, reaching for objects (d) Gross motor skills: crawling, walking, jumping, throwing Test scaled based on number of tasks for which child is in the bottom quartile of the reference population distribution (or alternatively in the bottom decile) Applied to children 0-83 months of age

Context, data, outcomes Additional tests applied to children 36-83 months of age TVIP: Test of receptive language 3. Memory for names: Visual memory from Woodcock-Munoz battery 4. McCarthy: Short-term memory: repeating strings of numbers Leg-motor skills: walking on tiptoes, standing on one foot 5. BPI: Behavioral Problem Index Incidence of behavioral problems All were piloted in our population, and minor adjustments were made, as needed

Choice of instruments All outcomes (except BPI) can be age-standardized using “reference populations” (like anthropometrics z-scores) All have been used extensively in the literature, including in developing countries Standardized Spanish-language version of test existed (for tests involving language, i.e. Denver, TVIP, and the memory for names) Ease of standardized administration of test by non-experts, in (often difficult) field conditions, with children who are not familiar with (fancy) toys Applicability of tests in population with potential large average delays Duration of tests (~ limited attention spans)

Pre-testing process Wider set of tests tried in pre-testing Appropriateness of tasks and test items Minimize scoring mistakes Timing Variation in population Power to distinguish sufficiently between observations in the left tail Establishing of trust with extremely shy children Creation of optimal test environment, given field circumstances And in particular: prevent interference and observation by other household members (~ minimize risk to human subjects)

Table 2: Frequency of delays in control communities relative to international norm

Context, data, outcomes In summary: Children in our sample have very large delays in a variety of domains: Especially large in language and in their social-personal skills Much smaller for motor skills Delays tend to increase with child age Socioeconomic gradients in cognitive outcomes—even within our sample of very poor children Gradients steepest for language, absent for the BPI => There may be potential for cash transfers to improve outcomes

Main results 1. Significant program effects on cognitive skills Program effects concentrated on outcomes with largest delays, steepest gradients Effects persist 2 years after the program ended 4. No evidence of significant heterogeneity by gender 5. Evidence of significant heterogeneity by child age Program effects on language concentrated among older children, ages 5-6

Main results: Robustness 5. Findings robust to a very large set of alternative specifications With and without controls Only children in household of main beneficiary Only children of main beneficiary Not removing age effects Not standardizing Not dropping 1 percent outliers Using narrower age range for Denver (upto 6) Not including children upto 10 months of age (in utero exposure) Using tasks in bottom decile (instead of bottom quartile) for Denver Using only observed (not reported) outcomes for Denver

Transmission mechanisms (1) Focus on three risk factors for child development Inadequate nutrition Inadequate stimulation Health status—including lack of micronutrients, exposure to infectious disease, caregivers’ mental health

Transmission mechanisms (1) Focus on three risk factors for child development Changes tend to be larger for older kids—often significantly so (for example, for child food intake, whether a child is read to, whether they have been taken to a growth check-up, have received micronutrients, or de-worming medication) Pattern consistent with the observed improvements in final outcomes

Transmission mechanisms (2) Is transfer income used like other sources of income? Maybe… Money is fungible Maybe not… Women received transfer Women are thought to spend a higher fraction of the resources they control on children than men (for example, Lundberg et al. 1997) Social marketing of program Kooreman 2000 on child support income in Holland Fraker et al. 1995 on food stamp “cashouts” in the US Estimate changes in intermediate inputs among treated households in three critical “risk factors” identified in the literature Food Stimulation Use of preventive health care

Transmission mechanisms: Food Engel curves at follow-up

Transmission mechanisms: Food Engel curves

Transmission mechanisms: Composition of food expenditures

Transmission mechanisms: Stimulation

Transmission mechanisms: Preventive health care

Transmission mechanisms: Conclusions Upwards shift in the Food Engel curve Changes in the composition of food expenditures Decrease in food share devoted to staples Increases in food share devoted to animal proteins, and fruits & vegetables Similar results for child food intake Increase in stimulation: Increase in proportion of children at a given expenditure level who have access to books, pen & paper Significant increase in number of hours read to Improvements in some measures of child health Program effects on these “risk factors” tend to be larger among older children Behavioral changes: At any level of expenditures, treated and control communities spend resources differently

Conclusions Cash transfers have modest but significant effects on some dimensions of child development after only 9 months Impacts persist 2 years after the program ended Evidence of program effects on risk factors for child development Nutrition Stimulation Child health Transfer income appears to have been used differently from other sources of income: suggests there were behavioral changes

Implications Large delays and the potential for catch-up indicate need for policy attention Interventions that facilitate investments made by parents to reduce risk factors can result in ECD gains Account for gains in ECD when considering gains from food security programs This might put focus on other aspects of food security (~ quality of the diet)

Next steps Next round of panel collected in 08-09 Different treatment groups have different income levels (though differences are small) => Further disentangle income effect from behavioral changes Complementary ECD intervention focused on parental care Role of information for changes in investment behavior in early childhood Allocated randomly on Atencion a Crisis treatment and control Role of mothers versus fathers Related work Medium/Long-term evaluation of the original CCT program in Nicaragua, taking advantage of randomized phase in Do kids that benefitted in first 2 years of life have better cognitive and schooling outcomes 10 years later ?

Thank you ! karen.macours@parisschoolofeconomics.eu