The Economist. “Cash to the poor, Pennies from heaven: Giving money directly to poor people works surprisingly well. But it cannot deal with the deeper causes of poverty”

The Economist

The evidence that simply giving cash to the poor and vulnerable households is successful is well accepted by those familiar with the BI.  Elsewhere, in more mainstream debate this recognition has lagged somewhat behind the empirical evidence, until now where a change seems to be afoot. A recent article in The Economist: “Cash to the poor: Pennies from heaven” charts both the origins of cash transfers (both in their unconditional and conditional forms), and most importantly gives its seal of approval that giving cash, when combined with wider measures, is an effective way forward for addressing inequality and poverty.

The article reaffirms the overwhelming evidence that giving cash improves key human development incomes (increased vaccinations and school attendance/attainment), spending money on improved living conditions, bolsters psychological well being (e.g. reduced levels of the stress hormone cortisone in the blood of recipients), depicts positively the capabilities of the poor by illustrating how transfers unlock and resource their economic potential, resulting in increased micro-economic activity and entrepreneurialism.

However, the article goes far beyond this, showing a nuanced understanding of the different outcomes generated by the incentives of soft and tough conditions (the latter credited with giving more significant results); the fact that pilot projects or one-off basic income-type transfers from Google or Facebook (as has occurred recently via ‘GiveDirectly’ in Kenya), might distort relations between recipient and non-recipient villages therefore skewing regional developmental goals. Moreover, from a Real Politick position the article also recognises the important strategic complementarity between conditions and cash and therefore political viability: conditions are the easiest way to assure political support by reassuring middle-class taxpayers that the poor are not violating the ‘norm of reciprocity’ through something-for-nothingism. And perhaps most importantly it lends weight to emerging concerns about the tendency of politicians and media to transform  ‘shame’ and cash transfers into an ironclad collocation, especially in OECD countries, by dispelling this idea: ‘[UCTs] dent the stereotype of poor people as inherently feckless and ignorant’. In short, the article represents something of a popular breakthrough in legitimising cash transfers, whether they be unconditional or the ‘soft’ and ‘tough’ conditional variants.

The Economist, “Cash to the poor, Pennies from heaven: Giving money directly to poor people works surprisingly well. But it cannot deal with the deeper causes of poverty”, The Economist, October 26, 2013.