20 August 2013

How you can literally give a whole family their entire annual income today for $1,000

Planet Money & This American Life have a really great new show on GiveDirectly.

What's best are the interviews with the recipients. It makes me feel very warm to imagine someone like Bernard Omondi in a remote village waking up one morning in slight disbelief to an SMS message containing $1,000 - his family's entire annual income - more cash than he has ever had at one time in his life - and that I sent him that.

A few things really struck me.

First, that even the recipients are sceptical about cash. Although they all explained how they themselves invested the money sensibly, they were quick to judge others in the village and explain how they had totally wasted theirs on booze. Perhaps this is a psychological thing and humans just have some kind of deep suspicion that everyone else is a bit of an idiot who needs taking care of? It reminds me of the surveys that show the overwhelming majority of drivers think that they are well above average (which is impossible). It's all the other road users who are idiots. Is that right? What is the relevant psychological bias? And what is the way of addressing this? The mounting evidence doesn't really seem to be doing the trick of convincing people.

Second, and related to that point, there seemed to be some surprise that many of the households had invested in a new metal roof. A chief criticism of someone who had "wasted" the transfer was "look at him, he still has a straw roof!" Now a metal roof which lasts for ten years actually turns out to be a great investment compared to a grass roof which needs constant costly maintenance. But I also wonder whether the fact that the transfer was explicitly targeted only on people with grass roofs had anything to do with people's choices? Might some people have got the new roof because they thought that's what the transfer was for?

Third, that "we are all poor around here." There are good reasons to think that selective-targeting of transfers can damage social relations. One of the recipients says "I've lost a few friends." Which could be important if you then later need to rely on those friends when you're in a tough spot. And so GiveDirectly are trying out a new model, identify a poor village and then give cash to everyone in the village, something that people asked for repeatedly when I spoke to recipients in Kenya and Eastern DRC.

Finally, there is an interview with a woman from Heifer International, which Chris Blattman comments on here (I think he actually goes a bit lightly on them). I actually think that sending a cow could be a great intervention, but it was just an embarrassing performance, which suggested that the organisation doesn't seem to believe at all that data can be informative about effectiveness, and doesn't seem to care at all about value for money (Heifer can't or won't even provide a per family cost for their programme, because "every family is different"). My money will keep going to the organisations interested in evidence and value for money. 


Joanne said...

The third point is particularly interesting... There is some evidence of a link between income inequality and (un)happiness (e.g. http://pss.sagepub.com/content/22/9/1095.short ... can't be sure to what extent the data from large US studies of income might apply to a completely different setting like this, of course). The new model sounds much safer!

Michael said...

Seems like a terrible idea to give $1000 to everyone in a village. All of a sudden who is a villager becomes an extraordinary salient political fight... or else all of a sudden a village swells to 27,000 people! And the mayor, who lives in capital and comes to village twice a year, is going to get his $1000, along with his kids who go to elite school in capital?

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