Slashdot Mirror
Google-Funded Study Finds Cash Beats Typical Development Aid (wired.com)
Traditional international aid programs typically offer some combination of clean water, livestock, textbooks, and nutritional supplements. A new study funded by Google.org and the US Agency for International Development asks whether the poor would benefit more if they were given cash and free to spend the money as they see fit. Wired: Researchers had two goals: compare an established program to combat childhood malnutrition with giving people the equivalent value ($117 per month) in cash, and compare the cash equivalent to a much larger sum, $532 per month. After a year, results [PDF] released Thursday found that found that neither the established program nor its cash equivalent were able to improve child health, but the large cash transfers significantly improved people's health and financial standing. On the surface, that's not surprising. Of course giving people more than four times as much money gives them access to better nutrition. But the study's co-author Andrew Zeitlin, a professor from Georgetown, says the idea was to provide benchmarks for future programs; it's not unusual for nutritional aid programs to cost $500 or even $800 per month, he says.
The traditional malnutrition program, called Gikuriro, was funded by USAID and administered by Catholic Relief Services. It combined help with water, sanitation, and hygiene with training on nutrition, some small livestock and seeds, and guidance on financial habits like saving. The study focused on households with children under the age of 5 and women of reproductive age, with an emphasis on the first 1,000 days of the child's life. The results indicate that Gikuriro helped recipients increase their savings and increased overall health knowledge and vaccination rates in villages, two of the program's goals. However, neither the malnutrition program nor its cash equivalent led to a more diverse diet, or improved child health, as measured by height and weight. The larger cash transfer, on the other hand, led to improvements in food diversity, a drop in child mortality, an increase in household wealth, and improvements in child health measurements, as well as improvements in village vaccination rates.
The traditional malnutrition program, called Gikuriro, was funded by USAID and administered by Catholic Relief Services. It combined help with water, sanitation, and hygiene with training on nutrition, some small livestock and seeds, and guidance on financial habits like saving. The study focused on households with children under the age of 5 and women of reproductive age, with an emphasis on the first 1,000 days of the child's life. The results indicate that Gikuriro helped recipients increase their savings and increased overall health knowledge and vaccination rates in villages, two of the program's goals. However, neither the malnutrition program nor its cash equivalent led to a more diverse diet, or improved child health, as measured by height and weight. The larger cash transfer, on the other hand, led to improvements in food diversity, a drop in child mortality, an increase in household wealth, and improvements in child health measurements, as well as improvements in village vaccination rates.
Back in the 1980s, more than one study showed that the bureaucratic overhead of the multitude of welfare programs was stupendously high.
Much cheaper to just give poor people the money.
"I don't know, therefore Aliens" Wafflebox1
Isn't this one of the basic ideas behind free markets. The invisible hand at work. Why should we assume that what someone from a third world country needs is a cow. I think avoiding cash is based on people's general tendency to want to control others. Don't want them to do something with their charity that they don't approve of with the money.
GENERATION 27: The first time you see this, copy it into your sig on any forum and add 1 to the generation.
So when you get automated out of a job (hypothetical but will be real for say 50% of non-lazy, average competent people soon), would you want your employer who automated your work, and still makes profits, to pay a tax on profit that gives you a bit of universal basic income? Or not?
Where are we going and why are we in a handbasket?
Give a third worlder $100 worth of food aid, you are transferring that much food from the US. Give them $100 to spend on food and they added $100 to the local economy in the food service industry (such as it exists).
So crazy it's just common sense.
the cash equivalent to a much larger sum, $532 per month
The Wired.com article contains a footnote that says:
CORRECTION, Sept. 14, 2:55PM: Recipients in the study who got cash received $117 or $532. An earlier version of this article incorrectly said they received those amounts per month.
politicians are like babies' nappies: they should both be changed regularly and for the same reasons
Be careful applying the results of this study to the welfare situation in Europe and America. This money was a one-time payment to very poor nations with limited infrastructure. The temptation to oversimplify this into "just give welfare recipients cash instead of assistance programs" ignores the reality of the situation on the ground in these nations.
I used to believe that just giving people money directly was better. I assumed that welfare recipients were mostly people who got stuck in a rut, and just need help getting out, and they can make better decisions about how to spend their money than some big a government organization. Then, I met actually poor and homeless people, talked to the councilors who work with them, and realized how naive I was. The situation is much more complex than the politically-charged stories of someone whose job was replaced by automation. Those are great for putting politicians in office but not for helping people on the street.
There are lots of people who, given a sum of money, have no idea what to do with it. They don't have sufficient math skills to budget, or sufficient literacy to read and understand and pay their bills. A significant portion of welfare recipients have poor education, mental health problems, or drug addiction. As such they are "reactive" with money. They throw it at the thing that has the most short term benefit. So, for example, they might pay their electric bill, then by a new TV, then some drugs, then fall behind on their rent. To help with this, lots of these programs pay the bill directly, or take the form of discounts by paying the bills partially. That way, the person can't choose to spend the money on a TV since the check went straight to the landlord. Or if the rent appears to be so much cheaper, so they are more likely to pay it. Some people take checks to check cashing locations that take 10% off the top. If you live on the poverty level, a 10% hit like that id destructive! So instead the programs give them bank accounts or ATM cards or specialty welfare cards. In Europe and the US much of the welfare state is aimed at these individuals with mental health problems who really can't manage the cash on their own. Giving them cash is disastrous.
An example of this that doesn't involve mental health problems is with young NFL players. The NFL realized that when someone comes straight out of college and gets a multi-million dollar salary, they tend to spend it on hookers and blow. So the NFL began a program of training players how to save and invest. If that seems obvious, consider the humor of walking into the local tax office with a 1040EZ form that shows income of $1 million, showing that you owe the government 20% of that. That's a holy !@#$ wake-up moment that most people don't think about. Similar problems happen with child actors or young musicians.
It's good that we are doing these studies, but I see a lot of responses say "See, we knew all along that giving people cash was better." BUI FTW! But that isn't really what this study is showing us, and we have lots of experience that got us to the system we have today.
> Fortunately you'll never be awarded enough responsibility to have to put your money where your stupid mouth is.
That's just a lame way of saying that you don't have a useful counter argument. In real life, foreign aid gets funneled through multiple intermediaries. ANY of these can skim or steal the whole thing.
Having a fat wad of cash is dangerous in any poor area. You don't need to have gone to Africa to understand this. Some less than "privileged" life experience could have clued you in to this.
Beyond that, we have ample examples from lottery winners of what happens when you give people money when they aren't used to having it.
Again, even those extreme examples aren't even really necessary if you aren't hiding in the suburbs with your head up your ass.
I can point to personally observed examples of poor people being retarded with their money.
Even RMS has a policy of not giving cash to panhandlers.
A Pirate and a Puritan look the same on a balance sheet.
No, they're telling you that giving cash directly to people in need improves their lives more than giving a similar amount of indirect charity.
Give them trackable stablecoins.
Recipient must click to agree to tracking of those funds through the economy.
(See corruption in action, or not as the case may be)
Learn.
Optimize.
Repeat.
Profit?
Where are we going and why are we in a handbasket?