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Sunday, August 25, 2013

'Is it Nuts to Give Money to the Poor?'

Chris Blattman on cash transfers to the poor:

Is it nuts to give money to the poor?: ...Cash transfers have been my day job for quite some days now. If you’ve been following this blog, you might have seen me describe my study of a wildly successful government program in Uganda, one that sent $8000 to groups of 20 young people to help them start skilled trades. Or an even more successful charitable program in Uganda that gave some of the poorest women on the planet cash to become traders. “Dear governments,” I wrote, “Want to help the poor and transform your economy? Give people cash.”
What’s interesting is that journalists keep turning to me to rain on my own parade. That’s fair, because that’s one of the things I do best. A few days after my plea to governments, I wrote another post, “Why cash transfers are not the next big thing.”
Perhaps that’s why I appear in Goldstein’s article as the skeptical academic. GiveDirectly is very optimistic about giving $1000 to poor people in Kenya. So am I, I say, but the research doesn’t really support it. Yet. ... Actually, there are couple of good reasons I’m well placed to be the skeptic.
One is that the wildly successful projects I studied gave other stuff, such as training or conditions or social pressure to invest. That probably mattered a lot, and we simply don’t know if pure cash will work as well.
That brings me to the second reason: I have two other projects in the field right now that give plain cash, and the signs are not so good. ... 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.
So why am I still an optimist? I think sometimes it will work and sometimes it won’t, but ... I think these studies will give guidance about why and for whom cash works best. That’s important. ...
This is actually the reason that GiveDirectly is a big deal. It’s the same reason randomized control trials in aid are a big deal. Economists can argue about whether any result from any study even applies to the village down the road, let alone the country next door. ...
GiveDirectly and randomized trials are helping drive a big, big change: those who help other people for a living are, for the first time, being forced to think about their top and their bottom lines. How much does what we do work? And is it worth the cost?
Believe it or not, these questions don’t really get asked. ...
I think this will remake the charity map in my lifetime. If I play but a tiny role in this change, it will be more impactful on poverty and misery than anything else I do in my petty little academic life. So expect me to keep writing long, blathering posts on cash transfers and field experiments...

    Posted by on Sunday, August 25, 2013 at 11:40 AM in Economics | Permalink  Comments (17)


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