Income transfer program in Brazil — first steps towards a social revolution

8 min readNov 5, 2018

Bolsa Família (Family Allowance) is an income transfer program created in the Brazilian government that has always caught my attention. Since its implementation, the initiative has been full of criticism and compliments, often creating an environment of groundless judgments. For me, it is an initiative with very positive impacts on society, but it is still not the ideal model. I read a few years ago a book by Eduardo Suplicy (then Senator) about the Basic Citizenship Income policy (or Universal Basic Income), which I will explore in another publication in the future. In this article, my intention is to synthesize a little of what I saw and take a kick-start to study the issue of income transfer and then develop other ideas toward UBI.

What I approach here: What is the Bolsa Familia, the principle of “giving free money” to people, positive and negative impacts and the exit from the program.

WHAT IS BOLSA FAMÍLIA

The program aims to eliminate extreme poverty by granting poor families (with monthly per capita income of up to 154 Reais — Brazilian currency) financial assistance. The average amount transferred to the beneficiary is R$ 187 (2018). This amount varies according to some factors. You start with a minimum of R$ 35 and add value based on the number of children and the family income. In order for the beneficiary to be eligible to receive the transfer, he must attend a series of compensations: attendance of children in school, medical care, prenatal care, nutrition, etc.. It was created in 2003, during Lula’s administration, by consolidating a series of programs initiated in the previous government. There are about 14 million families covered by the program, which reaches 55 million people. That is, about 1/4 of the Brazilian population is benefited. (1)

One in 10 families receives more than R$ 300 per month for the Bolsa Família benefit (14):

POVERTY REDUCTION

According to Tereza Campello (MDS Minister until 2016), the program generated a 62% increase in income for the poorest 20% in Brazil between 2002 and 2013 (while the richest 20% grew 2.6%) (2). Other economists, such as Marcelo Neri, also point to positive impacts on poverty reduction from the program initiative. According to an IPEA publication (3), Bolsa Familia was responsible for reducing income inequality between 15% and 20%. Chronic poverty fell from 14% to 3% between 2001 and 2011, and extreme poverty fell from 8% to 4.7%. Each real invested in the program earns 1.78 reais in economic activity. (3)

IS IT RIGHT TO “GIVE FREE MONEY”?

Wouldn’t be better to have other types of public policies? To Improve education, health, etc.? A consensus among advocates of the program is that the best person to say how money should be spent on the poor is the poor himself. It is an idea even advocated by the free market view that proposes less government spending, leaving the money in the hands of people so they decide what to do. The Bolsa Família represents almost 30 billion reais to the public coffers (4), but it is not even close to other government spendings. It is also worth remembering that part of this resource returns to the state indirectly, through taxes on consumption.

The initiative is not that “free” because it has a series of counterparts attributed to the beneficiary. But in any case, yes, it seems to me right and a good thing to “give money for free.” The fundamental question is that rather than reducing income inequality, the resource establishes a minimum for the citizen. To not have poverty, that is, to allow people to have a decent minimum to live seems a moral duty to us, as a society. What a minimum should be is another discussion also important and complex, but as a vision for a public policy, yes, offering this benefit is fundamental and, according to what the results have shown, brings benefits to the whole country.

POSITIVE IMPACTS OF BOLSA FAMÍLIA

Besides the economic benefit and the reduction of poverty, as previously mentioned, there are also other social impacts as a consequence of the program. For example, children benefiting from Bolsa Família have better school progression than other children with the same socioeconomic profile and not beneficiaries. The number of children from 6 to 16 years old who did not attend school dropped by 36%. When considering aspects such as performance, school drop-out, disapproval, and age-grade distortion, it is concluded that the program shows a decrease in educational inequality among beneficiary students in relation to other public school students. This has reduced the educational disadvantage of these people and converges with other pieces of literature, such as one made by the World Bank (2011), that shows positive educational results in all cases of conditional money transfer programs (3).

Relevant health impacts are also found such as increased vaccination, improved nutrition and decreased infant mortality. The economic benefit and the accompaniment, due to the counterparts, create a security that was previously non-existent for a majority of this population. In a way, it’s like taking a person out of poverty slavery. It opens up the possibility of better intellectual and social development as families and children cease hunger, become healthier and have better educational opportunities. For many families, this is a new chance for their children to have social mobility and to get out of the misery cycle (5).

CRITICS OF BOLSA FAMÍLIA

Not everything is perfect and the program also has its problems and challenges. The most serious and relevant are corruption and fraud. By no means does this make the program a bad public policy, but they are factors that should not be left behind. It is necessary to investigate, punish and create better systems to audit and follow with the operation in the fairest and ethical way possible.

Within this context, some important alerts. First, the power of control that municipal public agents have over the poor population because there is a queue for the program. “The discretionary margin of the work of the local agents of the Bolsa Família Program can be used by politicians of any party linked to the city hall.” (6) Second, people who should not receive are benefited, for example, more than 500,000 civil servants received it ( 7). A Federal Public Ministry survey showed that the Bolsa Família paid more than R $ 2.5 billion between 2013 and 2014 (4.5% of the total paid by the program in the period) for people who were not entitled. Although the government tried to re-register and used other verification methods, the number of frauds remains high. A high detailed verification made in 2016 showed 1.1 million people with irregularities (representing about 8% of the beneficiaries) (8).

There is also another more philosophical critique arguing that the state destroys people’s philanthropic propensity. The tax is not a voluntary donation and a donation program like this influences people not to be philanthropic. It is as if you outsource your social responsibility (9). Although this statement lacks data to support it, it is worth to think about. In fact, people should have donation initiatives, but this does not prevent a social understanding and agreement (formed through our democratic processes) that determines that the State acts in the fight against misery. As a society, I think it wise to use the State to articulate this great challenge, which would not prevent us from contributing in other ways.

LEAVING THE GRANT AND FUTURE THOUGHTS

The program must have exit doors. This is a strong statement, whether it is made by advocates or critics of the program. Yes! In the way the program is designed, it should have a process to the family no longer need it anymore to be out of misery. And this happens: 12% of the beneficiary population has voluntarily given up the program (2013) (10). Perhaps this percentage could grow and be a measure of the success of this public policy, but regardless, it shows us that there is a way out. The program is complemented by other public education policies that give access to universities and technical education. 70% of the adult beneficiaries of the program are active in the market seeking employment or performing precarious activities (with insufficient incomes and thus still needing assistance from the program) (11).

For me, Bolsa Familia is an excellent program, but it should probably not need an exit door. As a society, we should have the commitment to have the entire population be out of the line of misery and so have a minimum enough to live with dignity. This means that regardless of an individual’s income or age, he or she should be benefited with a minimum forever. This is a broader topic to be explored in a future article. The important thing to close is to understand that today, as a society, we have much to improve, but the future is promising and the historical data shows us an optimistic projection. Since 1990, misery and hunger have fallen by half according to the UN (12). We have fewer people below the line of misery, as Hans Rosling shows in his brilliant presentation in TED (13).

Therefore, the most positive path for the Bolsa Família program is its continuation and evolution. Make adjustments, continue to monitor social and economic impacts and, over time, propose a new policy that eliminates current problems and allows the entire population to enter a new level of social well-being.