Direct cash transfers for poor people to spend as they see fit. Does it work? Maybe. The initial evidence looks pretty promising:
- Cash transfers benefit children. Many studies find positive effects on the health of children – for example, large increases in height-for-age and weight-for-height in South Africa, …
- Cash transfers have long-term impacts. Recipients often save or invest a large proportions of the transfers they receive, generating increases in future income. (1,2,3,4,5,6) One study found that men’s annual income five years after receiving transfers had increased by 64%-96% of the grant amount. (24)
- The poor do not abuse cash as predicted by derogatory stereotypes. Across a range of studies, spending on alchohol and tobacco either decreases, stays constant, or at most increases in proportion with other spending (typically 2-3%). There is no evidence that cash transfers are spent disproportionately at the bar. …
OK, that last bit cuts a little close to home! But I do like the follow-up RCT study looking at cortisol levels as a measure of reduced stress – not that I’m a neuroeconomist. And compare this evidence with what has happened to the billions that governments and NGO’s have wasted in Haiti, as reported today in the NYT:
“When you look at things, you say, ‘Hell, almost three years later, where is the reconstruction?’ ” said Michèle Pierre-Louis, a former prime minister of Haiti. “If you ask what went right and what went wrong, the answer is, most everything went wrong. There needs to be some accountability for all that money.”
An analysis of all that money — at least $7.5 billion disbursed so far — helps explain why such a seeming bounty is not more palpable here in the eviscerated capital city, where the world’s chief accomplishment is to have finally cleared away most of the rubble.
That works out to about $750 per Haitian spent so far. 12/24/12