Children who grow up in poverty tend to carry the scars of their upbringing the rest of their lives. Research shows their health is poorer, they don't go as far in school, and they have less job stability than their wealthier counterparts.

The weight of under-achievement is borne primarily by the individuals, but there is also a price paid by society at large when children grow up in poverty. U.S. researchers estimate that the roughly 13 million American children who grow up poor end up costing U.S. society about $500 billion a year. The losses take the form of forgone earnings, involvement with crime, and the costs associated with poor health.

In Canada, a reliable definition of "poverty" is hard to find, although nobody doubts that the condition exists, even after a long economic boom. Whatever the numbers, poverty is obviously a needless drain on poor children's futures, and on Canadian society as a whole.

But how, exactly, does a country alleviate child poverty? It's not as though Canada hasn't had its heart in the right place. For years, governments have funnelled money to the families of poor children, believing that the solution to poverty is, well, money.

But this month, the C.D. Howe Institute issued a paper - Good Health to All by Claire de Oliveira - arguing it's time to take another approach. Even large cash transfers have not had the hoped-for effect on poor children, the paper notes. As an example, it cites U.S. findings that large cash transfers under the former Aid to Families with Dependent Children program had no effect on infant birth weight. Some argue that that program also actually increased teen pregnancy rates by guaranteeing income.

British researchers found that when families are given unexpectedly generous child benefits in the form of cash payments, much of the unanticipated increase is spent on "adult-related goods" rather than on children's needs.

If the institute's findings are valid, provincial and local governments should focus on in-kind transfers to impoverished children: These include healthy breakfasts and lunches provided through the school system, improved knowledge and awareness of healthy lifestyles, and, for parents, instruction in parenting skills and children's nutrition.

Breaking the cycle of inter-generational poverty will result in enormous benefits for Canada and, more importantly, for the hundreds of thousands of children whose lives are compromised by circumstances over which they have no control.