Unconditional cash transfer

Unconditional cash transfer (UCT) programs aim to reduce poverty by providing welfare programs without any conditions upon the receivers' actions.^[1] This differentiates them from conditional cash transfers where the government (or a charity) only transfers the money to persons who meet certain criteria.^[2]

Types of unconditional cash transfers

Unconditional cash transfers could vary in a number of ways:^[3]

• They could be one-off or recurring: One-off unconditional cash transfers involve either a literal one-time transfer or a transfer over a short period of time, intended to provide people money that they could use for long-term expenses. On the other hand, continuing or recurring cash transfers offer a small sum of money periodically, enabling people to save at a greater rate, or to spend more. Generally, unconditional cash transfers are more likely to be one-off than recurring.
• They could be means-tested at the individual/household level or given to all individuals/households in a given area.
• They could be means-tested at the level of villages or applied to all villages in a given district or region.
• The grant could be made at the individual or household level, and its size could be fixed or variable based on the household size.

Programs and organizations involved

GiveDirectly

The largest organization exclusively devoted to cash transfers is GiveDirectly. GiveDirectly was founded by economics graduate students in Cambridge, Massachusetts, with two main inspirations: the growing evidence that cash transfers could work, and the growth of cheap and reliable money transfer technology.^[4] GiveDirectly's operations were initially limited to Kenya, where the m-Pesa money transfer system is well-established. In November 2013, the organization expanded to Uganda.^[5]

Charity evaluator GiveWell first noticed GiveDirectly in July 2011,^[6] named it as a standout charity in November 2011, and gave it top charity status starting November 2012. GiveDirectly has been a GiveWell top charity in the years 2012, 2013, 2014, and 2015.^[7] Largely as a result of GiveWell's recommendation, Good Ventures, the private foundation of Facebook co-founder Dustin Moskovitz and his wife Cari Tuna, that works closely with GiveWell, has donated well over $40 million to GiveDirectly (in grant sizes of $7 million, $5 million, $25 million, and $9.8 million).^[8]

An impact evaluation of GiveDirectly's cash transfer program was conducted in collaboration with GiveDirectly, with the working paper released in October 2013.^[9] The paper attracted commentary from World Bank economist David McKenzie. He praised the robustness of the study's design and the clear disclosure of the study lead's conflict of interest, but raised two concerns:^[3]

• The use of self-reporting made the results hard to interpret and rely on (this being a feature of any study that attempted to measure consumption).
• The subdivision of the sample into so many different groups meant that there was less statistical power that could be used to clearly decide which group had better outcomes.

Chris Blattman, a prominent blogger and academic in the area of development economics, with a particular focus on randomized controlled trials, also blogged the study. He expressed two main reservations:^[10]

• The observer-expectancy effect, where the people being asked questions may be subtly influenced in their answers by the experimenter's expectations.
• The lack of clear positive effect on long-term outcomes, as well as the lack of increased spending on health and education.

The Cash Learning Partnership

The Cash Learning Partnership is a partnership of over 150 organizations and over 5000 individuals in the humanitarian sector where they pool knowledge and expertise surrounding cash transfers and their effects.^[11] Their website includes a number of studies on unconditional cash transfers, with a particular focus on cash transfers made in the aftermath of natural disasters. Salient examples include:^[12]

• UNICEF's Alternative Responses for Communities in Crisis Programme, the largest humanitarian multi-purpose unconditional cash transfer partnership in the Democratic Republic of the Congo.^[13]
• Unconditional cash transfers to reduce food insecurity for displaced households and to assist with repatriation in Niger following a food crisis.^[14]
• Unconditional cash transfers for relief and recovery in Rizal and Laguna in the Philippines, in the aftermath of Typhoon Ketsana.^[15]

Other programs

A blog post by Vishnu Prasad for the Institute for Financial Management and Research summarized existing research on unconditional cash transfers, citing studies around the following programs:^[16]

• South African Old Age Pension Scheme, a means-tested unconditional cash transfer scheme in South Africa to women over the age of 60 and men over the age of 65.
• Bono de Desarollo Humano, an unconditional cash transfer scheme in Ecuador
• South Africa's mean, unconditional child grant

Reception

The use of unconditional cash transfers as a benchmark

Jeremy Shapiro, a GiveDirectly co-founder and the person who published GiveDirectly's impact evaluation, has argued for using cash transfers (and more specifically, unconditional cash transfers) as a benchmark against which other development interventions should be evaluated, due to the simplicity and scalability of cash transfers.^[17]

Others who have also endorsed the idea of using cash transfers as a benchmark, citing GiveDirectly, include Innovations for Poverty Action^[2] and GiveWell.^[18]

Media discussion of unconditional cash transfers

Since 2012, there have been a number of media pieces discussing cash transfers, generally in the context of reporting on GiveDirectly. This includes coverage in the New York Times,^[19] The Economist,^[20] the Freakonomics radio podcast,^[21] and Forbes.^[22]

See also

• Unconditional versus conditional cash transfers
• GiveDirectly
• Unconditional basic income, which is universally given to every member regardless of their wealth.

References