Mexico paid poor families cash for school and clinic attendance

After the economic crisis that unraveled Mexico in 1994, poverty rose sharply and the government's established answer was showing its age: decades of in-kind food subsidies, expensive to run, leaking value between the state and the table, and doing nothing to change what poor households could become. The subsidies fed poverty without ending it, and every peso spent on them was a peso that could not be spent on anything else.

At the Ministry of Finance, deputy minister Santiago Levy produced a report on poverty alleviation that became the seed of something else: a pilot, then — after Levy pushed for proper monitoring and coordination before scaling — a national program launched in 1997 as Progresa. The money came from reallocating the ineffective food subsidies the program displaced.

Paid cash to mothers, conditional on verified school and clinic attendance, so the transfer funded present needs and bought children's future human capital.

Cash respects household knowledge of needs better than delivered goods.

Conditions tie payments to schooling and preventive health, breaking poverty cycles.

Paying mothers aimed money at those most likely to spend on children.

Randomized rollout produced evidence that helped the program survive elections.

When a subsidy keeps a problem alive without changing behavior, buy the behavior instead: condition support on verifiable actions that produce the outcome you want.

Poverty fell 1.8 points, child illness ~23%, secondary enrolment +3.4 points for girls — from $58m and 300,000 families in 1997.