One of the main benefits of giving cash is that people can use the cash to buy whatever they want or need. When people first hear about cash transfers, this freedom is sometimes one of the things they worry about – “and… they can just spend it on anything?” But it turns out that, on average, people don’t use cash transfers to increase consumption on things like alcohol or tobacco. Instead, cash transfer recipients are more likely to use the money to make investments (buying tin roofs or livestock) that have big dividends over time.
Recently, we wanted to learn more about the individual stories that make up the aggregate results we’ve seen, so we added the question below to the normal set of questions we ask recipients after each transfer:
We like to give cash because it enables people to do many different things, some things that we have never heard about. Some you might think are good and some maybe you think are bad. Was there anyone that you knew who spent in a different or interesting way in your village?
The results were fascinating. Recipients built fish ponds, bought livestock, wired their homes and started side businesses charging electronics for others, rented land to farm and hired neighbors in their village, or paid university tuition for their children. Which… brings me to power saws. One recipient told us about his own spending that he thought was unique (note these quotes are taken by our follow-up call team in Kisumu, Kenya):
I decided to buy a power saw so people call me./hire me,and I use it to cut down the trees/wood for building houses,making furniture and some use the wood (its burnt) to make charcoal,this is the work I do to earn a living(cutting down trees (using my power saw), meant for those purposes)
Neighbors of his also commented on the purchase:
One neighbor: She says there was a person who bought power saw that he uses in business and this impressed her.
Another: its her who they added some amount and bought a power saw machine which earns them a lot of profit.
Now, who knows what the economics are of starting a power saw business (well, this guy might). And in general we rely more on independent, randomized controlled trials to understand the impact of our cash-transfer program and others. But these anecdotes help illustrate a lot of the value of cash transfers: there’s no power saw charity. As far as we know, there’s no tin roof charity either, or a motorcycle charity for aspiring motorcycle taxi drivers, a fish pond charity for future fish farmers, or a dowry charity for people who just want to marry. There’s also definitely no combined power saw/motorcycle/fish pond/dowry charity. Cash is a compelling weapon against poverty precisely because people can use it how they see fit, responding to their own specific needs and dreams.
Note: you can see the full, unedited answers to this question for the subset of recipients we asked at the link below. After each transfer we send, we call every recipient to ask them a few questions, mostly to learn about how we can improve our process or identify any adverse cases we should follow-up on. Members of our Kisumu-based team then write down what recipients say as closely as possible. We added the question on interesting spending to a randomized 15% subset of the surveys we did over the last couple of months.
You’ll see some recipients thought others spent the money poorly. We know in aggregate study after study has shown that cash transfers are not associated with increases in spending on “bad” items, but it’s no surprise some people may choose to spend in ways others find “bad” (and, knowing humans, it’s certainly no surprise that cases of one person judging another’s spending would occur!).