Over the past few months, there seems to be an avalanche of studies and debates discussing cash transfers to the poor as a new paradigm in aid financing.
A recent (refreshingly well balanced) article in the Economist entitled Pennies from heaven summarized the topic nicely in its sub-headline: "Giving money directly to poor people works surprisingly well. But it cannot deal with the deeper causes of poverty".
It makes reference to some of the evidence around, which in a nutshell shows that unconditional cash transfers do work well in SOME circumstances. The most cited case, GiveDirectly's work in Kenya (see here and here) is important for a number of reasons, not least bring the issue - supported by rigorous evaluation - to the forefront of the debate on what should be the minimal benchmark for financing development work - the so called "better value than cash" requirement that would be the onus of future development projects.
On the other hand, the conditions that enable it (including a good spatial proxy for intra-village poverty, high mobile money penetration, etc etc.) would not be easily found in most places. More importantly, UCTs do not seem to succeed in generating great development outcome in every context (and frankly, we shouldn't expect them - or anything - to): Despite Chris Blattman explicit mention in a recent post entitled Is it nuts to give money to the poor? not to quote him on it yet, I'll do just that: "One is a tough case: street youth and petty criminals in Monrovia. The early signs are that the cash ran through them (but don’t quote me yet, since I haven’t seen half the data). The other is a tough case too: a horserace between getting a factory job and getting a grant to start your own business, both compared to neither intervention. The early signs on cash transfers are not promising, but again, less than half the data are in. So maybe I, and GiveDirectly, will prove ourselves wrong."
On the other hand, the conditions that enable it (including a good spatial proxy for intra-village poverty, high mobile money penetration, etc etc.) would not be easily found in most places. More importantly, UCTs do not seem to succeed in generating great development outcome in every context (and frankly, we shouldn't expect them - or anything - to): Despite Chris Blattman explicit mention in a recent post entitled Is it nuts to give money to the poor? not to quote him on it yet, I'll do just that: "One is a tough case: street youth and petty criminals in Monrovia. The early signs are that the cash ran through them (but don’t quote me yet, since I haven’t seen half the data). The other is a tough case too: a horserace between getting a factory job and getting a grant to start your own business, both compared to neither intervention. The early signs on cash transfers are not promising, but again, less than half the data are in. So maybe I, and GiveDirectly, will prove ourselves wrong."
The issue is of course more nuanced, as pointed out in the article, as well as many other commentary's - notably Berk Ozler's posts on the matter (see a good summary here) - and we basically do not know enough (yet) about when Unconditional Cash Transfers (UCTs) would work at all, and work better than other interventions - such as Conditional Cash Transfers (CCTs). One of the best reviews of UCTs and CCTs so far is a Campbell Collaboration Systematic Review on the Relative Effectiveness of Conditional and Unconditional Cash Transfers for Schooling Outcomes in Developing Countries (link). It main finding is that "... both CCTs and UCTs improve the odds of being enrolled in and attending school compared to no cash transfer program. ... programs that are explicitly conditional, monitor compliance and penalize non-compliance have substantively larger effects (60% improvement in odds of enrollment). Unlike enrollment and attendance, the effectiveness of cash transfer programs on improving test scores is small at best. More research is needed that looks at longer term outcomes such as test scores, as well as on evaluating UCTs more generally." So, clearly, we are witnessing the early days of this debate - and what a potentially important one it is. Chris Blattman believes it will remake the charity map in his lifetime. Here's hoping. As someone working for a (largish) organization in the periphery of the
debate - the wonderful world of research on agriculture for development -
where we are (still, for now) discussing funding cycles of 10-15 years within a "contribution instead of attribution" paradigm, I am fascinated by this debate's potential impact and am so happy to see it brewing up a storm.
On a similar vein, and something to blog about in the future, is Development Impact Bonds. The next big thing in this aid financing debate. If you're curious, have a look at the (always excellent) Center for Global Development page on the topic (here) and this nice short blog post entitled Who Has First DIBs?
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