Message and price components of Family Caps: Experimental evidence from New Jersey

Abstract

In this paper, we examine the relative efficacy of two mechanisms—price consideration and the message of social responsibility—in accounting for Family Cap effects on fertility behavior. The Family Cap is a component of welfare reform policy that denies additional cash benefits to children born 10 or more months after a woman entered the welfare rolls. We use data from the New Jersey Family Development Program (FDP) evaluation that employed a classical experimental design. We find that fertility behaviors are influenced by both Family Cap price and message mechanisms but that these effects are conditioned by welfare recipients’ time on welfare and race. Black women who have longer stays on welfare are more likely to be influenced by price while women with shorter stays are influenced by both price and the social message. We believe our results have implications not only for future public welfare policy initiatives but for any social policies that attempt to influence behavior directly, through individual rewards and punishments, and indirectly through the activation of social or community pressures.