Giving Compass' Take:
- Mulago Foundation director Kevin Starr explores the long-term impact of unconditional cash transfers, arguing they may only serve as a temporary solution to poverty.
- How do unconditional cash transfers compare to other types of cash-based development practices? How are donors poised to fund research that can investigate the impact of various cash transfer programs?
- Learn about the impact of digital cash transfers in Bangladesh during COVID-19.
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In the early 2010s, GiveDirectly gave the poorest households in rural western Kenya big unconditional cash transfers (UCTs), roughly equivalent to a year’s income. A year later, the result was that people were happier and better fed. They’d bought tin roofs and cows and other good stuff, and didn’t waste money on bad stuff. In the short term, giving really poor people a bunch of money left them a lot better off.
That’s not surprising. We already knew from lots of studies that poor people make good use of money, that easing acute stressors makes people happier, and that even a short-term escape from a scarcity mindset triggers all kinds of good things. But given Mulago’s mission of “lasting change at scale,” we wanted to know whether short-term benefits turn into lasting impact. Did this big infusion of cash change a family’s socio-economic trajectory over time?
Alas, it did not. At four years, the families that received GiveDirectly’s cash were not meaningfully better off than control families. While they had several years of increased consumption, everyone caught up to them four years later. Those short-term gains were sustained—nobody went backward—but as a slowly rising tide also elevated everyone else to the same level, it turned out be a temporary boost. Good things happened, but: this big infusion of money did not change their long-term trajectory, it didn’t seem to alter their lives in profound ways, and it didn’t lead to much in the way of lasting impact.
Funders like Mulago should still pay close attention to cash studies. We have to be willing to shift resources if cash in whatever form turns out to have more impact than the kinds of solutions we currently fund—although really, I expect Mulago investments to perform a lot better. But even as we learn about the potential of cash—and these studies are proliferating like rabbits—it’s high time that proponents figure out where the money’s supposed to come from, at scale.
Read the full article about unconditional cash transfers by Kevin Starr at Stanford Social Innovation Review.