The best thing about cash benchmarking is it highlights just how small most aid is

The best take on the new cash benchmarking study from Rwanda was this one by Michael Kevane:

"the main takeaway is that neither intervention (when evaluated at the low Gikuriro cost of $141 per household) improved child outcomes." Yikes. I guess though if household size = 7 that is only $20 per person.

Should we really be surprised that giving someone $20 doesn't improve any measurable outcomes? Maybe Kevane's maths is wrong and household size is smaller, but $20 is so small we could double it and still not expect to see anything.

That's one big advantage of cold hard individual cash transfers, they make explicit what the actual amount per person is, which is not so obvious when its one big community project costing loadsamoney and affecting loadsapeople. John Quiggin made this point years ago.

Last year, DFID gave £2.6 BILLION pounds to countries in Africa. That's so much money! How are they still so poor when we give them BILLIONS of pounds every year? Well, hold on, there are 1.2 billion PEOPLE in Africa. So that works out at just over £2 each for the whole YEAR. Of course it doesn't go to everyone, let's say the money is perfectly targeted on the poorest 10% of people. So they get £20 each.

Somehow there is a lot of magical thinking that by pooling money together it somehow automatically has totally outsized impacts. Of course its possible that smart investment in research or better governance can have truly outsized impact if it can nudge a country toward a slightly higher growth rate, but that isn't what most aid is even trying to do, and even when it is they stuff is wicked hard and we can expect most attempts to fail.

Aid is great but less hubris please. And less ridiculous implicit expectations from what aid could plausibly achieve from the sceptics too.

The State of the Humanitarian Aid System 2015

“ALNAP” launched today the 2015 “State of the Humanitarian Aid System” Report.

One of the key findings highlighted in their fancy infographics:

"44% of aid recipients surveyed were not consulted on their needs by aid agencies prior to the start of their programmes”.

In totally unrelated news, the DFID-ODI-CGD High Level Panel on Humanitarian Cash Transfers chaired by Owen Barder published it’s report a few weeks ago, arguing that much more use should be made of cash transfers, because most of the time they are more cost effective than giving out stuff.

In further totally unrelated news, DFID published two press releases today highlighting substantial non-cash aid in response to humanitarian crises in the Central African Republic and Malawi.

In Owen’s words: "the questions should always be asked: “Why not cash? And, if not now, when?”"

Never Mind Development, here's Nirvana

The biggest cash transfer programme in the world continues apace, as subsidies for fuel in India which used to be paid to fuel companies are being redirected into consumer's bank accounts.

Continuing the push to extending coverage under the Aadhaar program, targeting enrollment for 1 billion Indians; as of early February, 757 million Indians had been bio-identified and 139 [million] Aadhaar linked bank accounts created;

...

The heady prospect for the Indian economy is that, with strong investments in state capacity, that Nirvana today seems within reach. It will be a Nirvana for two reasons: the poor will be protected and provided for; and many prices in India will be liberated to perform their role of efficiently allocating resources in the economy and boosting long run growth.

From India's recently published 2014-2015 Economic Survey led by Arvind Subramanian, the government's Chief Economic Advisor (and on leave from CGD) HT: Vinayak Uppal

Safety nets and economic growth

Stefan Dercon wrote a paper a couple of years ago about how cash transfers might boost growth - by focusing on investments in ECD, smoothing geographical mobility, or smoothing the school-to-work transition.

To those possible avenues, Harold Alderman and Ruslan Yemtsov (ungated) now add:

• improving financial markets
• improving insurance markets
• improving infrastructure (through public works programmes), and
• relaxing political barriers to policy change

I find the last one particularly interesting. So for example, Ghana recently tried to offset the removal of fuel subsidies with a doubling of the coverage of the still-small national cash transfer programme to 150,000 households - helping to avoid Nigeria-style protests. Alderman and Yemtsov note that Indonesia pulled a similar trick on subsidy reform, and Mexico's safety nets helped usher NAFTA in.

But this political point goes beyond relaxing barriers to policy change, to relaxing barriers to technological change. Otis Reid pointed out to me this paper by economic historians Avner Greif and Murat Iyigun which argues that:

"England’s premodern social institutions-specifically, the Old Poor Law (1601-1834)-contributed to her transition to the modern economy. It reduced violent, innovation-inhibiting reactions from the economic agents threatened by economic change."

To be crude - it's worth paying off the Luddites so they don't get in the way of growth-enhancing technological change.

Economists prove importance of transparency in social protection?

"We find that the mistargeting of a cash transfer program in Indonesia is significantly associated with increases in crime and declines in social capital within communities. Hence poorly administered transfer programs have a potentially large negative downside that extends beyond the pure financial costs that have been the focus of the literature to date."

A new paper by Lisa Cameron and Manisha Shah  (ungated). A similar point made by my colleagues Ian and Nils a few years ago based on some qualitative fieldwork.

Cameron and Shah conclude that:

"This study underscores the importance of targeting programs in a way that is acceptable to the a ffected communities. Program acceptance can be enhanced by improving targeting accuracy and by transparent communication of this mechanism and the program's aims to the general population."

Cash transfers taking off in South Sudan

Tombura-Yambio Catholic Diocese launched a Conditional Cash Transfer project last friday - supporting 120 households looking after children whose parents have died of HIV/AIDS, with 200 SSP per month ($63/£38) each.

This is the second NGO-implemented one I'm aware of, after the Save the Children pilot in 2011 (incidentally, whatever happened to that?).

Meanwhile a new civil society initiative Fresh Start South Sudan calls for putting oil money directly in the hands of the poor.

Thanks to Tom for the links.

Addendum: A friend reminds me that DFID have planned cash transfers as part of the Girl's Education project - published details here on the very good DFID project tracker.

60% discount on holiday giving

I've been frustrated this year about not really being able to give to GiveDirectly because they aren't registered in the UK and so are ineligible for Gift Aid (a 25% top-up donation by the government taken from your income tax payment).

I just discovered that this PROBLEM IS NOW SOLVED.

The new Giving What We Can Trust is eligible for Gift Aid, and they will pass on your money directly (plus gift aid) to the charity of your choice (as long as its either one of their recommended charities, or one of Givewell's recommended charities, which GiveDirectly is, though I'm guessing there is some additional bank charge for the trust to send money to GiveDirectly in the US?).

On top of this, Good Ventures (an awesome foundation financed by one of Facebook's co-founders) is offering a 100% match for any donations to GiveDirectly up to January 31st 2014.

So if you give £100 to the trust, this becomes £125 with gift aid, and £250 with the match (which is your 60% discount), which minus processing fees comes to around £225 directly in the hands of a family living in extreme poverty somewhere in rural Kenya, a pretty hefty chunk of cash when you're living on a dollar a day.

Big thanks to everyone at Give Directly, Give Well, Giving What We Can, Good Ventures, and Innovations for Poverty Action who have made this stunningly simple effective efficient way to make the world a slightly better place possible.

Merry Christmas!

Preach!

Really excellent stuff from Jishnu Das, tearing apart a recent Economist article on cash transfers:

recall that in welfare economics there are two rationales for government interventions to make people better off. First, governments fix market failures. ... Second, governments redistribute income by giving cash to the poor. ... Within this framework, giving cash always increases the welfare of the recipients; what we also worry about is the extent to which market failures circumscribe the ability of society to do better.

 ...

“does giving cash work well” is a well-defined question only if you are willing to say that “well” is something that WE, the donors, want to define for families whom we have never met and whose living circumstances we have probably never spent a day, let alone a lifetime, in. 

Has our hubris really taken us that far? What happened to respect for the poor? 

From there The Economist article degenerates, with “findings” that CCTs “work well” when the conditions are on things that people would not purchase without the conditions (I am serious; cut through the jargon, and that’s what it says). If by now you are tearing your hair out, join the club.

...

Health is not welfare, neither is education. So, can we please stop making judgments about what poor people should and should not do with money that is redistributed to them?

What will it cost to eliminate poverty?

Development Initiatives have a new report out today with, complete with some good-looking charts, reviewing the global picture of financing for development.

A couple of charts really stand out.

First this one, showing the depth of poverty. Ending "extreme" poverty - the 1.2 billion below $1.25 a day is feasible by 2030, but there are 5.2 billion living on less than $10 a day, which is roughly the poverty line in most rich countries. 

Second, this one, showing the level of per capita government spending. 82% of the world's poor live in countries with annual spending below $1,000 per person. I'm not so sure what to make of this. For those in countries with spending below $500, which looks like around half of the global poor, this puts paid to the notion that the poor all now live in middle income countries that should be funding their own social programmes without aid.

For those closer to the $1,000 mark, this is still really a pittance, but it's also more than enough to bring individuals above the poverty line with a direct cash transfer. How does it feel to live on less than $1.25 a day in a country where the government spends twice that much for you on public services?

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. 

Hey Angus! That's why we give directly!

Angus Deaton has a new book (via Tyler), which will no doubt provide a magisterial lesson in economic history, but I'm afraid we're going to have to agree to disagree on policy.

He starts off well (there are a couple of pdf chapters online at the publishers' website here)

I believe that we—meaning those of us who are fortunate enough to have been born in the “right” countries—have a moral obligation to help reduce poverty and ill health in the world.

And then gives a rehearsal of some of those old aid arguments - yeah maybe individual projects are good for people but what about all those bad political incentives. Essentially the balance of evidence really falls on neither side, so it kind of comes down to personal judgement, or taste, or whatever, and Angus had decided that despite sending kids to school and saving lives (for sure) the negative political impacts of aid (possibly) are larger, making for a net negative total impact.

The concern with foreign aid is not about what it does to poor people around the world—indeed it touches them too rarely—but about what it does to governments in poor countries. The argument that foreign aid can make poverty worse is an argument that foreign aid makes governments less responsive to the needs of the poor, and thus does them harm.  

... Those who advocate more aid need to explain how it can be given in a way that deals with the political constraints.

Well guess what PROBLEM SOLVED Angus - you can skip the government and send yo money DIRECT TO THE POOR PEOPLE RIGHT HERE. Do try and keep up now, GiveDirectly.org have been in business for TWO YEARS already. 

Against cash transfers in South Sudan

A few quick thoughts on this recent article republished in the Sudan Tribune by the Auditor General of South Sudan, Steven Wöndu.

He makes 4 arguments against cash transfers

1. There is no clear definition of poverty in South Sudan
2. Targeting would be impossible
3. Delivery would be impossible
4. Cash transfers won't increase productivity

I'd suggest that the first two issues could be resolved by instituting a universal child benefit. No poverty targeting to worry about. Delivery systems could reasonably quickly be created by mobile phone companies if the government committed to start pushing serious money through this system. And finally that cash transfers surely will increase productivity down the road if they have an impact on child malnutrition, but that the productivity effects should not be our highest concern when there are people who are literally starving.

Update: I should credit Joe Hanlon with the child benefit idea (here and here), and also note the Blattman vs Banerjee debate on the subject from 2011.

Videos of the poor

ODI have just posted a great couple of videos of cash transfer recipients telling their own stories. The first video opens with "There is a great deal of debate around the effectiveness of cash transfer programmes," to which should perhaps have been added, "mostly amongst people who have apparently never spoken to an actual poor person who has received a cash transfer, or, apparently, read any of the voluminous literature documenting the many positive impacts of giving very poor people a little bit of money."

The first one made me tear up a bit.

My name is Mukulu Kimuyo. I live in Kwakavisi. I am thirteen years old. 

After we started receiving cash transfers we were able to buy a roof and repair our house. 

Before the roof was repaired the rain would always fall on us while we were sleeping. 

Now life is different because I don't have torn clothes, I have pens, I have shoes, and I don't go hungry.

If the cash transfers stopped I would have to wear torn clothes again, I would have to go to school without pens, or even shoes, and I might be sad. In fact, very sad. 

After I complete my studies, I would like to be a doctor

The second focuses on Carlito, whose legs are paralysed and uses a second-hand wheelchair thrown out by a local hospital, and who receives "just over 4.5 US dollars per month as part of Mozambique's Basic Social Subsidy Programme." That we live in a world in which it is somehow deemed in any way acceptable that we support a disabled person with just 4.5 dollars a month kind of makes me ashamed to be human.

My name is Carlito. I am 25 years old. My legs have been paralysed since 1992. 

This is my home. It is made of mud and is damaged often. 

I wish I lived in a concrete house like my neighbour's home, as it would not need so many repairs and would be more comfortable. 

If I had some money I would like to run a small shop. This is my dream.

These are not outliers. They are pretty normal people. These are the lives and concerns of millions. 

Taking Sen Seriously

Another development report on hunger, another puzzling failure to take Amartya Sen, the power of markets, and simple cash transfers, seriously.

We have known for over 20 years, since Sen wrote the book on famine in 1981, that hunger comes not from there not being enough food being produced, but from some people not having access to that food (either through their own production or through the market).

And yet again and again we hear a weird underpants gnome-esque non-sequitur, in which

1. The problem: There is already enough food in the world to feed everyone
2. ?????
3. The solution: Produce more food!

Not that the 8 proposals are necessarily bad ideas. But the evidence supporting public investment in agriculture is decidedly mixed. We had hunger a long time before land grabs existed. And attacking tax loopholes seems a pretty indirect route to reducing hunger.

Especially when there is one very simple, scalable, cost effective policy, which has a direct impact on food consumption, can help to ensure that everyone can participate in the market and get a stake in the food that already exists (as well as create demand for new production), which has a very strong evidence base behind it, and gets no mention whatsoever.

Givewell summarise:

"Cash transfers are one of the most-studied development interventions ...  

There is very strong evidence indicating that cash transfers lead to large increases in consumption, especially of food... 

Bottom line: Cash transfers have the strongest track records we've seen for a non-health intervention ..."

Of course cash is not a silver bullet. But it is surely part of the solution, and on a much bigger scale than at present. So I'm continually mystified by how something so obvious gets so overlooked. The only conclusion I can come to is that the reason we continue to ignore all the evidence, and in fact the very reason why there has been so much research to begin with, and hence why the evidence base is so strong, is that our industry has such a deep suspicion of actually trusting poor people to make any decisions for themselves. Which is sad.

More on the Indian National Cash Transfer

Easterly announces the latest from the NYT with a "India finds cash grants to the poor are no panacea."

The article quotes Jean Drèze, a real Indian-social-policy expert, who notes

“An impression has been created that the government is about to launch an ambitious scheme of direct cash transfers to poor families,” Jean Drèze, an honorary professor at the Delhi School of Economics, wrote in an e-mail. “This is quite misleading. What the government is actually planning is an experiment to change the modalities of existing transfers — nothing more, nothing less.”

Now obviously far be it from me to disagree with Drèze, but the article also notes

“I think this is one of the biggest things to happen to India’s financial system in a decade,” Ms. Ananth [President of IFMR] said.

and

India spends almost $14 billion annually on this system, or nearly 1 percent of its gross domestic product, but the system is poorly managed and woefully inefficient ... Rajiv Gandhi, who served as prime minister for five years in the late 1980s before being assassinated in 1991 while running for office, once estimated that only 15 percent of the money spent on the poor actually reached them; his son Rahul Gandhi said recently that this level may now be as low as 5 percent.

Erm, if that is even close to correct, then getting an additional 85% of $14 billion into the hands of the poor is HUGE. And what kind of economist gives a damn about panaceas anyway? Aren't we supposed to celebrate marginal gains? Especially when those marginal gains could equate to billions of dollars getting into the hands of the poor.

And finally the criticism that this is just about vote-buying is the weakest of them all. If it is going to be a successful election strategy, it is because people value the transfers more than whatever they were getting before, and therefore it is a good policy idea. And if political parties are competing on who can provide the best social policy rather than caste or religion or whatever else, then that is fantastic. 

Cash Transfers in Congo

One of the main challenges of the Concern (and other) humanitarian programmes in the Eastern Congo is that even if they wanted to give out cash rather than goods or vouchers, the security situation is too fragile and there are no banks outside of Goma.

The BBC World Service Africa Today podcast reports that a truck belonging to the Banque Internationale pour l'Afrique au Congo was just robbed of $1 million in broad daylight in the middle of Goma, the driver and a bystander shot and killed. What a mess.

The best news story of the year

In January 2013, India will start the world's biggest social innovation programme: giving cash directly to its poorest citizens in a bid to reduce its very large problem of corruption that stops subsidised goods and welfare benefits from reaching those who really need them. This initiative will affect at least 720 million people—a population almost the size of Europe!

The scheme is open to families who live below or just above the government-set poverty line. The Indian government expects to transfer up to 40,000 rupees ($720) a year to each poor household. Cash handouts will replace the money the government currently spends on subsidies on goods such as fuel, food and fertilizer. India plans to launch this ambitious social innovation program from 1 January, covering 18 states by April and the whole country by the end of 2013.

from JustMeans.com via Martin Tisne. 

If this is to be believed, the consequences for human welfare are simply staggering. Nothing else even comes close.

Brazil's Bolsa Familia reaches 50 million people and has lifted 20 million out of poverty. India's programme could reach seven hundred and twenty million people.

Just wow. Sceptical comments to calm me down below please.

Social protection in Congo (Brazzaville)

Colleagues Anthony Hodges and Clare O’Brien have a new working paper out with Lisile Ganga from UNICEF on possibilities for social protection for the Republic of Congo. The bottom line - universal child allowances are affordable and would have a huge impact on poverty.

The Republic of Congo, also known as Congo-Brazzaville, is a country with striking contrasts between its status as an oil-rich, low middle-income country and its high levels of poverty and child deprivations. Social protection provision is largely limited to a small minority in the formal sector of the economy. 

This paper presents the results of quantitative micro-simulations on the cost, impact and cost-effectiveness of different policy options for cash transfers in Congo, including universal and targeted child allowances, old-age pensions and disability benefits, along with an analysis of the existing social protection system, the policy framework and institutional capacity. 

While a poverty-targeted child allowance would be the most cost-effective option, in terms of cost per unit of reduction in the poverty gap, institutional and technical constraints make large-scale poverty targeting unviable in a country with very weak governance. Universal categorical approaches would be much simpler to implement, while still being financially feasible given Congo's substantial fiscal surplus (14% on average in 2006-10). Under the assumptions employed for the simulation, a universal allowance for children under 5 would reduce the national poverty headcount by 9% while costing only 0.7% of GDP.

A simple way to improve the targeting of cash transfers

Many social cash transfer programmes in poor countries are targeted on the poorest people through a "proxy-means test." This is a way of estimating the hard-to-measure actual poverty of a household through an easy-to-measure proxy - the ownership of assets such as quality housing or a vehicle.

An alternative method of targeting is "self-targeting" in which the experience of receiving assistance is made unpleasant to discourage the rich from applying - such as through requiring manual labour.

A new paper adds a simple layer of self-targeting onto the existing proxy-means test for a programme in Indonesia with good results. Instead of travelling round to households to administer the test at their home - participants are simply requested to travel themselves to an office to make their application. This simple added inconvenience made a big difference to the effectiveness of the targeting.

per-capita consumption was 13 percent lower for beneficiaries in the self-targeting villages than those under the status quo. Moreover, exclusion error was actually less of a problem in self targeting than in the status quo: the very poorest households were twice as likely to receive benefits in self-targeting than in control areas.

Alatas, Banerjee, Hanna, Olken, Purnamasari, and Wai-Poi, Ordeal Mechanisms in Targeting: Theory and Evidence from a Field Experiment in Indonesia, http://economics.mit.edu/files/8449

Cash transfers in Northern Kenya

The BBC have a short clip here of the new DFID Minister Justine Greening visiting the Hunger Safety Net Programme in Northern Kenya, where eligible households are said to get $40 every couple of months via a "Smartcard."



OPM is managing the evaluation of the project: you can see the Year 1 impact report here.