Should We All Just Give Cash Directly to the Poor?

Silicon Valley heavyweights like Facebook co-founder Chris Hughes and Google have a new favorite charity: GiveDirectly, an organization that makes direct transfers (via M-Pesa) to poor people in the developing world. From Forbes:

“Instead of building hospitals, why don’t we just give poor people money? Research shows it’s effective,” [Hughes] said. Hughes, who purchased The New Republic magazine in early 2012 and serves as publisher, also joined the board of GiveDirectly.

Backing up Hughes’s point was Jacquelline Fuller, Director of Giving at Google. She told the crowd Thursday night that one of her superiors at Google was extremely skeptical when Fuller first suggested that Google back GiveDirectly. “I was told, ‘You must be smoking crack,’ ” Fuller recalled. But GiveDirectly had exactly what Google wanted: lots of data on how the recipients of cash used it to improve their nutrition, their health and their children’s education. After looking at the data, Google donated $2.5 million to GiveDirectly.

GiveDirectly stems from economist Paul Niehaus‘s research in India, where to limit corruption the government  makes direct cash transfers via mobile phones.  “A typical poor person is poor not because he is irresponsible, but because he was born in Africa,” says Niehaus, adding that GiveDirectly’s transfers have had positive impacts on nutrition, education, land, and livestock — and haven’t increased alcohol consumption.  The charity is also No. 2 on Givewell’s list of recommended charities.

(HT: Marginal Revolution)


Danny

What I don't get is not how poor people are poor or why they are poor. What I don't get is why poor people have kids.

Joby Elliott

Being human and having poor access to birth control thanks to short-term thinking and religious hangups? It's pretty simple, really.

B P

I can't believe there hasn't been a Seinfeld reference yet:

The Human Fund: Money for People!

George!!!

Rick Mayhew

I've wondered how eliminating food stamps and just putting plain white label basics in every grocery or convenience store would work. The products (milk, bread, etc.) would be available to everyone, but they could always purchase name brand (using their own money), if they wanted to. The street value would be zero, since everyone could pick up a carton of milk at the store for free. I’m sure there would be some waste, but would it be as great as the current system of welfare? Free plain label would eliminate hunger in the United States and could eliminate the need for special school breakfast/lunch programs.

ToddA

There should be a lifetime cap on the amount of assistance a person can draw. All assistance would be in the form of cash. There would be an application process, but no means testing.

Christopher Dobbie

We do it here in Australia; it's called the dole. You get over $500 for the fortnight for being poor.

Works well, keeps people healthy and ready to take up opportunities and helps out small business.

You should try it.

Also a great way for the Government to spread the fiat money they create each year out.

Grace

I think it's worth trying. Insisting on giving non-monetary aid is implying that poor people would waste the money they are given, which is patronizing and untrue. Living in a first world country doesn't mean that you're financially savvy, if being financially savvy is even necessary to buy food for poor people. I doubt someone who has grown up in poverty would be quick to misspend money. Poor people also know what they need and what their immediate concerns are, which we don't.
I don't think short-term relief would generate so much dependency because someone who has grown up in poverty and hardship would be hard-pressed to forget their struggles. I doubt a few paychecks would reduce these people to inactivity.
Also, forgoing short-term relief altogether is essentially abandoning the people in need right now. Economic and social reform takes a long time, and people who are poor right now won't live to see the effect. It's also hard, so poor people of many generations might not either.

Read more...

Adam

This is such a liberal pipe dream. What they don't understand is--to the person you're giving it to--it will never be enough. There is no 'enough' with liberal causes. Just look at how much money the world has thrown at Africa over the last 60 years, and has it done anything? The various governments are falling apart, people are still starving, AIDS is still an epidemic, and people are even failing at farming. Throwing money at people is never a solution. If anything, there should be a No Handouts Policy. This enforces the behavior that if you want something, you go out and earn it, or make it yourself.

rani

sir iam a house wife i have two childrens , my husband is very poor he credet 7 laks he going to another place all persons are comeing to my house give me my money but idont have money so please help me. me and my children my children age 7years boy 3 years girl pls save my life my childrens life jesus sav the my family my a/c 20077418442 in sbi state bank of india.

Usnik Tuladhar

The idea of giving directly is definitely an intriguing idea. This idea asks us to be more trusting of our human brethren. Many charities have been known to be irresponsible. Irresponsibility is a trait that is not limited to poor people in third world countries.
If giving cash is just as effective as giving cows or hosting eye clinics, then what is wrong with giving cash? Well, charities have to measure effectiveness before it can be compared.

ToddA

American welfare should work this way. A one time gift of cash to get you back on the road to recovery.

James

Does this article conflict with the findings in "Would a Big Bucket of Cash Really Change Your Life?"

It seems like this article says that windfalls do permanent good, but that wasn't seen in the Georgia land-grab case.

John Molet

I gave when I was able to work, now. I am too proud to beg. So I took what I learned over thirty years but. now I am to poor to do it. If anyone can help me, I can help thousands of others. Visit my website and don't think just because I am online I have money, I live in a shed and thank God, someone had thrown this laptop away.

This is who I was and this is what I am doing. Of course if none of you have never been robbed or had a gun stuck in your face, it will not mean much, but. Don't think just because it hasn't happened to you yet, it can't some day. Thats what all the people I installed for thought. Then they were begging to for my help.

http://stingercommunications.webs.com/

Thank you for giving me a place to attempt to get my life back. John

Sidney Rodrigues

Please, Fabio Akita, do not misinform the people! Bolsa Familia is not an unconditional transfer of cash for poors, only who have sons could receive the money and it stablishes many obligations for them, like maintain the children in the school, for example. It is a very successful aid program and it is been replicated in other countries, even in developed countries. For the interested in get more information, this is a link where you get more an impartial information http://factsreports.revues.org/1314
The program has contributed to Brazil’s reduce poverty, according to research promoted by some universities and UN, and it had significant effects on school attendance rates and in reducing the child labor.