A new paper from development economists Chris Blattman, Nathan Fiala, and Sebastian Martinez complicates our picture of cash transfer programs, and suggests that the best way to think of cash is as a way to speed up poor people’s escape from poverty, rather than as the key to helping them escape poverty in the first place.
The paper is about a program in northern Uganda, which with a GDP per capita of $2,352(compared to $59,495 in the US) is among the poorest countries on earth; the north has endured years of violence driven by a Christian terrorist organization called the Lord’s Resistance Army.
The cash-transfer intervention, called the Youth Opportunities Program, was offered in 2008 to small groups of young people. Each person in every group was given about $382 to learn a skilled trade, with the goal of becoming craftsmen — which craft exactly varied from group to group — with higher earning potential. Twists like this are pretty common with cash programs. Recipients didn’t get the cash just to, say, make it easier for them and their families to eat. The goal was to become more productive and get into higher-paying jobs that could lift them out of poverty permanently.
In 2012, Blattman, Fiala, and Martinez checked in on the young adults in the Ugandan program four years after the intervention, and the results were incredibly encouraging. “Relative to the control group, the program increases business assets by 57 percent, work hours by 17 percent, and earnings by 38 percent,” they wrote. “Many also formalize their enterprises and hire labor.” The implication was that giving ambitious young people in poor countries a little bit of cash could transform their lives, propelling them into more profitable careers and even encouraging them to build businesses with other employees. At the time, Blattman argued that the results suggested an answer to “one of the big questions in development: how to create jobs and speed up the shift from agriculture to industry in developing countries?” Their findings suggested that helping countries in Africa go through the rapid development process of China or India could be as simple as handing out cash.
Now he and his co-authors have checked back in again nine years after the intervention, and the results are a great deal less promising than after four. While the people who got cash were earning 38 percent more money than the control group in year four, the control group caught up to the cash recipients by year nine. Overall income was no higher in the treatment group, and earnings were higher by a small (4.6 percent), statistically insignificant amount. The recipients did have more assets on average than people not getting the money, which makes sense; they had a sudden influx of money, some of which was sure to go toward buying durable assets like metal roofs, fruit-bearing trees, or work tools. Blattman and his co-authors didn’t find that assets like livestock and trees were leading to a lot more income nine years out
“The right way to look at these results is that people were richer for a while and then they have nicer houses,” Blattman said. “Consuming that stuff makes you less poor. But I think what a lift out of poverty means is not just that you have some extra savings and a buffer, but actually that you have some real, sustained earnings potential, and that’s not what we’ve seen.”
Women who got the money also reported that their kids were healthier than women who didn’t. But overall, the study strongly suggests that the cash grant wasn’t a catapult out of poverty. It just helped people who were already going to escape dire poverty do it a little bit faster.
Berk Özler, the lead economist for the poverty cluster of the World Bank’s Development Research Group, is a bit more circumspect. Özler has been sharply critical of GiveDirectlyfor being unduly boosterish and insufficiently evidence-based in its arguments for cash. He’s not anti-cash, per se — “nobody’s disagreeing that cash is good,” he explained. Looking at the people who got the cash, Özler said: “You have a third that never really start a business, a third that are disinvesting, and a third that are happy to be small businesses not really growing. That’s kind of disappointing, but it’s surprising to me. I don’t really understand why this is happening.”
The point of the program was to get more people into skilled trades, like tailoring. But that doesn’t just affect the people getting the skills; it affects the other tailors already working in the area. “Creating 10 to 15 tailors at once in a parish of 10,000 people, it’s got to affect existing tailors,” he said. “Maybe some went out of business.” It’s hard to know whether the program is cost-effective without knowing what happened to those other tailors. If the program just made some people successful tailors at the expense of others, that’s not really a huge gain.
“We’re not arguing ‘cash good versus cash not good.’ Cash is good!” he said. “But the only way to give it isn’t, ‘I’ll drop 1,000 bucks on you and go away.’”
The hope was that the Ugandan program had found one that would set up a durable, sustained escape from poverty for beneficiaries. That doesn’t really seem to be the case. But the cash certainly helped the recipients. And it’s possible an even better-designed cash program could help more.
“We don’t want to sound too disappointed,” Blattman told me, summarizing his takeaway. “It’s still better than anything else we’d seen.
https://www.vox.com/2018/9/10/17827836/cash-basic-income-uganda-study-blattman-charity
No comments:
Post a Comment