������Ƶ

Last week, New York City Mayor Michael Bloomberg that he was expanding the city’s “Health Bucks” program, which gives shoppers using SNAP at farmers markets an additional $2.00 for every $5.00 they spend, to all 138 of the city’s markets. Like matched savings accounts and other initiatives that reward productive choices, Health Bucks is a great example of how incentive-based policies and investments can change behavior—and counter longstanding myths about what is and is not possible for low-income families in the meantime.

Mayor Bloomberg’s time in office has been marked by some controversial proposals to reduce obesity among New Yorkers—most notably, the on soda purchases by SNAP customers. The problem with these types of “stick” solutions that focus on the individual consumer is that they ignore the systemic barriers that created the problem in the first place—in this case, inadequate access to healthy, affordable food in low-income communities. These policies can be especially harmful when they stigmatize a particular group, such as SNAP participants, by implicitly blaming them for making “bad” choices. By contrast, “carrot” solutions promote the desirable choices by using targeted investments to change options and environments.

An interesting parallel exists more broadly with respect to asset-building policies in the federal budget, which incentivizes and subsidizes certain choices through tax breaks and credits. The rich don’t get richer as a result of some innate ability to manage their money and make the “right” choices; those choices are facilitated and rewarded through a system of government support, largely filtered through the tax system. Meanwhile, lower-income Americans benefit far less from the tax code’s incentives, as demonstrated by our recent Assets Report ; for example, the single biggest support for homeownership in the tax code comes from the Mortgage Interest Deduction, which accrues almost exclusively to higher-income households. The idea of using tax incentives to promote savings and asset-building makes sense and has been effective—but the lack of equity in the distribution of those incentives is a major contributor to the widening of the wealth gap.

The structure of the Health Bucks program actually mirrors a key proposal of the Asset Building program: the Saver’s Bonus. The Saver’s Bonus would provide a 1:1 match up to $500 for low and moderate-income households that make deposits from their tax refunds to a range of savings products. Tax filers without a bank account would have the option of opening one directly on their tax return.  Like Health Bucks, the Saver’s Bonus is designed to incentivize and reward desirable behavior. In New York, the Department of Consumer Affairs has piloted the Saver’s Bonus through its $aveNYC program, which launched in 2008. $aveNYC offered a fifty percent match to deposits made into an eligible account from a participant’s tax refund, provided the accountholders maintained the deposits for at least a year. The program resulted in 2,165 new accounts and an average of $561 in savings per account, before the match. For a more thorough discussion of the Saver’s Bonus and the $aveNYC pilot, check out Rachel Black and Reid Cramer’s recent paper.

So why are these particular incentive-based solutions so important? First, because they counter societal myths that have become prevalent and damaging. Specifically, that low-income people can’t save, which was one of the major barriers to the acceptance of asset-building theory twenty years ago, and that low-income shoppers don’t have a preference or desire to purchase healthy foods. These assertions are regularly presented as foregone conclusions, without consideration for the fact that choices, expectations and futures are shaped by policy.

Second, these solutions are important because they actually work. Regardless of income level, people respond to meaningful, accessible incentives. Purchases by SNAP customers at farmer’s markets in NYC have risen from $1000 in 2005, when EBT readers first became available, to $640,000 last year. An initiative very similar to Health Bucks, Wholesome Wave’s, reported that 86% of their consumers stated that they ate more fresh fruits and vegetables, and more than 90% said that the fresh foods they bought at the market “made a big difference in their family’s diet.” Likewise, with $aveNYC, seventy percent of participants continued to save after the required savings period ended.

The wealth gap isn’t widening on its own, nor is healthy food by nature unaffordable. The right policies and the right structures can create new possibilities and shift the status quo.