The Overseas Development Institute has just released a systematic review of the evidence on cash transfers, which is timely as I think we all felt that FCDO’s 2011 review had probably passed its sell-by date. The review is a massive undertaking, covering 165 distinct studies of 56 programs and reviewing impacts on a wide range of outcomes – poverty, education, health and nutrition, savings, investment and production, employment, and empowerment. Its broad conclusions are not surprising (at least to us): “the evidence reflects how powerful a policy instrument cash transfers can be, and highlights the range of potential benefits for beneficiaries.”

But there are some interesting patterns one level down:

  1.  Emerging market governments are shifting quickly towards cash-based programming. For example, 40 of 48 countries in sub-Saharan Africa now have at least one unconditional cash transfer program. This is in noticeable contrast to international aid flows (ODA) which continue to be predominantly in-kind (e.g. humanitarian aid flows are at most 6% cash). Bottom line, poor countries are increasingly likely to give cash, rich countries primarily give stuff.
  2. We know relatively little about how to design cash transfers for maximum impact. The review does a wonderful job highlighting key dimensions of design – recipient gender, transfer size, timing and frequency – and summarizing what we know on each, but the “what we know” comes mostly from efforts to compare results across studies in different locations, time periods, etc. There are very few studies that test different design choices head-to-head — as for example we did with gender in our Rarieda study, or are doing now with transfer structure in our collaboration with ideas42. We continue to see these questions as obvious low-hanging fruit given how much money is already being moved without clear answers.
  3. The world doubts that our ongoing study of macroeconomic impacts will find much. ODI considers effects on productivity and growth as as possibility but reports that “the literature concurs that such effects are likely to be limited.” The great thing about experimental testing is: we’ll find out.
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