New Study Finds Cash Alone Effective Way to Fight Poverty

by Sabrina I. Pacifici on October 27, 2013

“Researchers today released the results of a long-awaited study, which may reveal a promising new direction in alleviating poverty, one much simpler than many popular aid methods. While traditional charities and aid programs often have infrastructures designed to deliver specific types of aid to the poor, such as food or livestock, the researchers studied a new group, GiveDirectly, which simply gives money directly to poor people in Kenya. The study found that poor recipients spent the money on a broad variety of items, including food, shelter, and productive assets, leading to significant improvements in income, food security, and psychological well-being. The study, conducted with the nonprofit Innovations for Poverty Action and funded by the National Institutes of Health Common Fund, focused on households in rural Western Kenya, where per capita income is the equivalent of $1 a day and 64 percent of people reported not having enough food in their house for the next day. Researchers tracked GiveDirectly recipients who were randomly selected to receive the equivalent of $720 US dollars on average. The money was transferred through a mobile phone-based banking system called M-PESA, and recipients were free to spend it any way they wished.”

Welfare Effects of Unconditional Cash Transfers: Evidence from a Randomized Controlled Trial in Kenya (Johannes Haushofer with Jeremy Shapiro).  The full paper will be available in November 2013.
Pre-analysis plan: PDF
Policy brief: PDF

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