Research on Cash Transfers
Cash transfers have been thoroughly and rigorously shown to reduce poverty and improve lives.
Overview of the evidence
Cash transfers have arguably the strongest existing evidence base among anti-poverty tools, with dozens of high-quality evaluations of cash transfer programs spanning Africa, Asia, and Latin America and including both unconditional and conditional cash transfer. These studies include many randomized controlled trials (RCTs) and also include studies that measured impacts 4–5 years out,1,2 evidence which exists for hardly any other interventions.
Specific impacts vary across studies, since—by design—cash transfers give the poor the flexibility to pursue their own goals. There are three consistent themes, however:
1. Cash transfers have positive impacts, including on children.
Cash transfers have positive impacts, including on children. Many studies find positive effects on the health of children—for example, large increases in height-for-age and weight-for-height in South Africa, large reductions in HIV infection rates and psychological distress in Malawi, and large reductions in the incidence of low birth weight in Uruguay.3,4,5,6,7,8,9,10,11,12,13 Several studies also find that unconditional cash transfers (UCTs) substantially increase schooling and decrease child labor.14,15,16
2. Cash transfers have long-term impacts.
Recipients often save or invest a large proportion of cash transfers, generating increases in future income.3,17,18,19,20,21 One study found that men’s annual income five years after receiving transfers had increased by 64%–96% of the grant amount.1Another found that four years after youths received one-time grants, they earned 41% more on average than those who had not received grants.2 Only one other development intervention—deworming in Kenya—has been studied over a longer time horizon.
3. The poor do not systematically abuse cash transfers (e.g. on alcohol).
Despite stereotypes that poor households will use cash transfers to buy alcohol, tobacco and other “temptation goods,” studies consistently show no significant impact or a significant negative impact of transfers on such spending.4,18,19,22,23,24,25,26,27 Similarly, most studies find no effect on the number of hours worked. Some studies show increases in working hours as household members migrate to obtain better jobs.23,28,29,30,31
- De Mel, Suresh and David McKenzie and Christopher Woodruff. “One-time Transfers of Cash or Capital Have Long-Lasting Effects on Microenterprises in Sri Lanka.” Science 24 February 2012.
- Blattman, Chris, Nathan Fiala and Sebastian Martinez. “The Economic and Social Returns to Cash Transfers: Evidence from a Ugandan Aid Program.” CEGA Working Paper, April 2013. [pdf]
- Duflo, Esther, “Grandmothers and Granddaughters: Old-Age Pensions and Intrahousehold Allocation in South Africa,” World Bank Economic Review, June 2003, 17 (1), 1–25.
- Cunha, Jesse, “Testing Paternalism: Cash v.s. In-Kind Transfers in Rural Mexico,” Technical Report, Stanford University March 2010.
- Baird, Sarah and Richard Garfein and Craig McIntosh and Berk Ozler, “Effect of a cash transfer programme for schooling on prevalence of HIV and herpes simplex type 2 in Malawi: a cluster randomised trial.” Lancet, February 15, 2012.
- Paxson, Christina and Norbert Schady, “Does Money Matter? The Effects of Cash Transfers on Child Health and Development in Rural Ecuador.” World Bank Policy Research Working Paper 4226, May 2007.
- Aguero, Jorge and Michael Carter and Ingrid Woolard. “The Impact of Unconditional Cash Transfers on Nutrition: the South African Child Support Grant.” mimeograph, August 2010.
- Baird, Sarah and Jacobus de Hoop and Berk Ozler. “Income Shocks and Adolescent Mental Health.” World Bank Policy Research Working Paper 5644, April 2011.
- Amarante, Veronica and Marco Manacorda and Edward Miguel and Andrea Vigorito. “Do Cash Transfers Improve Birth Outcomes? Evidence from Matched Vital Statistics, Social Security and Program Data.” National Bureau of Economic Research Working Paper 17690, December 2011.
- Fernald, Lia and Melissa Hidrobo. “Effect of Ecuador’s cash transfer program (Bono de Desarrollo Humano) on child development in infants and toddlers: A randomized effectiveness trial.” Social Science & Medicine 72 (2011).
- Akee, Randall and William Copeland and Gordon Keller and Adrian Angold and Jane Costello. “Parents’ Incomes and Children’s Outcomes: A Quasi-Experiment Using Transfer Payments from Casino Profits.” American Economic Journal: Applied Economics 2 (1), 2010.
- Macours, Karen and Norbert Schady and Renos Vakis. “Cash Transfers, Behavioral Changes, and Cognitive Development in Early Childhood: Evidence from a Randomized Experiment.” The American Economic Journal: Applied Economics 4 (2), 2012.
- The Kenya CT-OVC Evaluation Team. “The impact of the Kenya Cash Transfer Program for Orphans and Vulnerable Children on human capital.” Journal of Development Effectiveness 4 (1), 2012.
- Edmonds, Eric. “Child labor and schooling responses to anticipated income in South Africa.” Journal of Development Economics 81 (2006).
- Edmonds, Eric and Norbert Schady. “Poverty Alleviation and Child Labor.” forthcoming, American Economic Journal: Economic Policy.
- Baird, Sarah and Craig McIntosh and Berk Ozler. “Cash or Condition? Evidence from a Cash Transfer Experiment.” Quarterly Journal of Economics 126 (2011).
- Sadoulet, Elisabeth, Alain de Janvry, and Benjamin Davis, “Cash Transfer Programs with Income Multipliers: PROCAMPO in Mexico,” World Development, June 2001, 29(6), 1043–1056.
- Rubalcava, Luis, Graciela Tereul, and Duncan Thomas, “Spending, Saving, and Public Transfers Paid to Women,” On-Line Working Paper Series CCPR-024-04, California Center for Population Research 200.
- Attanasio, Orazio and Alice Mesnard, “The Impact of a Conditional Cash Transfer Programme on Consumption in Colombia,” Fiscal Studies, December 2006, 27 (4), 421–442.
- Gertler, Paul, Sebastian Martinez, and Marta Rubio-Codina, “Investing cash transfers to raise long term living standards,” Policy Research Working Paper Series 3994, The World Bank August 2006.
- de Mel, Suresh, David McKenzie, and Christopher Woodruff, “Returns to Capital in Microenterprises: Evidence from a Field Experiment,” The Quarterly Journal of Economics, November 2008, 123 (4), 1329–1372.
- Evans, David K. and Anna Popova. “Cash Transfers and Temptation Goods: A Review of Global Evidence.” World Bank Policy Research Working Paper 6886, May 2014.
- Maluccio, John A. and Rafael Flores, “Impact evaluation of a conditional cash transfer program: the Nicaraguan Red de Protección Social,” Technical Report 2005.
- Concern Worldwide, “Cash Transfers as a Response to Disaster,” Technical Report 2007.
- Brewin, Mike, “Evaluation of Concern Kenya’s Kerio Valley Cash Transfer Pilot,” Technical Report, Concern Kenya 2008.
- Slater, Rachel and Matseliso Mphale, “Cash Transfer, Gender, and Generational Relations: Evidence from a Pilot Project in Lesotho,” Technical Report, Overseas Development Institute May 2008.
- The Kenya CT-OVC Evaluation Team. “The impact of the Kenya Cash Transfer Program for Orphans and Vulnerable Children on household spending.” Journal of Development Effectiveness 4 (1), 2012.
- Skoufias, Emmanuel and Vincenzo Di Maro, “Conditional Cash Transfers, Adult Work Incentives, and Poverty,” The Journal of Development Studies, 2008, 44 (7), 935–960.
- Bertrand, Marianne, Sendhil Mullainathan, and Douglas Miller, “Public Policy and Extended Families: Evidence from Pensions in South Africa,” World Bank Economic Review, June 2003, 17 (1), 27–50.
- Posel, Dorrit, James A. Fairburn, and Frances Lund, “Labour migration and households: A reconsideration of the effects of the social pension on labour supply in South Africa,” Economic Modelling, September 2006, 23 (5), 836–853.
- Ardington, Cally, Anne Case, and Victoria Hosegood, “Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa,” American Economic Journal: Applied Economics, January 2009, 1 (1), 22–48.