What happens when $1000 of manna falls onto your mobile phone? The GiveDirectly study of unconditional cash to poor farmers in Kenya is out.
The answer? Many good things. Less hunger, more businesses and incomes, long term investments in assets like cattle or roofs. Interestingly, little effect on education. But, then, primary education is mostly free in Kenya so money might not be the big thing holding people back from schooling. The bottom line: people don’t waste it.
The study is extremely well done. There are a lot of different treatments to evaluate for a modest sample–big versus small grants, one-time versus spread out, to men versus women. Fortunately for the authors most of the impacts are big enough they can parse out the impacts, and they are largely promising. It turns out
I think skeptics would be right to make two points.
First, maybe the people who get the cash tell surveyors what they want to hear.This is always a risk. You can get around it by looking at big things you can observe, like new cattle and roofs. Or asking questions indirectly (e.g. measuring expenditures and assets, which respondents might answer less strategically). This satisfies me.
The second concern, from some policymakers–how long does this last? Isn’t far better to invest in children’s health and education? I suppose the answer is that cash is not necessarily a substitute for improving public schools and lowering the cost. Nor is it an easy substitute for establishing clinics or public health campaigns. It’s possible cash would stimulate health and education more, but that’s unproven and (my guess) unlikely.
The kinds of programs we should put squarely in our sights, and consider replacing with cash, are the kinds where we deliver expensive, heavy, cumbersome stuff to people because we think we know what they need–bags of rice, business skills trainings, vocational training, fertilizer, agricultural inputs, and the like.
The policy world needs to run some horse races between cash and these competitors, and also between different kinds of cash (or should I say different strings attached). Cash and strings may or may not win out, but the evidence it might is becoming too overwhelming to ignore.
Yesterday’s Economist article is possibly the single best piece of journalism on cash transfers I’ve seen so far. And by “best” I mean detailed and accurate, representing a large body of academic work well–all traits that, sadly, tend to make the Pulitzer committee fall asleep in bed.