“Let them eat cash”: Some post-op reflections

Lately, my research and others have suggested that simple cash handouts might be one of the most effective anti-poverty strategies in the world. Is it time to bring it home?

Today I have an Op-Ed in the NY Times on cash for New York’s homeless.

You might also worry that the poorest of New York are different. The average person in Uganda is impoverished; it’s easy to believe he would make good decisions with cash. But a homeless person in New York is not average. Substance abuse is pervasive. Maybe panhandlers here are different from the global poor.

I used to believe this. Now I’m not sure. A few years ago, I started working in Liberia’s urban slums. My colleagues and I sought out men who were homeless or made their living dealing drugs or stealing. Many abused alcohol and drugs. We tested different programs in a randomized trial of a thousand men. One thing we tried was giving out $200 in cash.

The short story: An eccentric Chinese millionaire tried to give cash to the NYC homeless last week, and an NGO put a stop to it.

The original article is equal parts fascinating and infuriating. Mostly infuriating. First, the millionaire. He took out a full page ad to announce the $90,000 giveaway. The ad probably cost more. So it was mainly an exercise in self-aggrandizement.

Then there was this:

Mr. Chen addressed the audience and then uncorked the news the crowd had been waiting for: “I will give $300 for every participant today.”

The homeless men and women shot to their feet, whooping and applauding.

“No he won’t,” Michelle Tolson, the mission’s director of public relations, said. “The police will shut him down.”

Officials from the Rescue Mission quickly brokered a deal with Mr. Chen’s assistants, allowing him to hand $300 to several chosen homeless clients in a symbolic gesture. The clients, however, would have to return the money.

I can understand Rescue Mission’s concerns. The Op-Ed was accepted Friday night. Saturday I walked by the same two homeless people that have been on my corner since I moved here two years ago. They are not in great shape. “Really?” I thought to myself, “Did I just tell New Yorkers they should hand out big bills to these people?”

Admittedly we had our worries in Liberia too. This is why we started on a small scale–a few dozen men on the streets, with innumerable safeguards and interventions a-ready–before scaling up to the full evaluation of 1000. In the following year, most of what I believed about homeless men, drugs, and petty criminals in Liberia was turned on its head. Even though I’d already spent more than a year with many of the men. So experimentation and testing your prejudices is important.

(Aside: if you’re interested in hearing more about the Liberia project, there is this NPR Planet Money podcast. Also this Foreign Affairs piece. The working paper will be out soon.)

Even so, I worry I’m wrong, and I worry about bad consequences. At the end of the day, I advocate taking chances and experimenting because I believe (indeed I’ve seen) the cost of ignorance is greater. That doesn’t mean it’s not morally troubling.