To Help The World’s Poorest, Treat Them Like People

CREDIT: Gates Foundation


CREDIT: Gates Foundation

It turns out, if you think of the world’s poorest are real people instead of lazy and “dependent” do-nothings, you might be able to do something about global poverty.

Traditional foreign aid works through governments or NGOs. The U.S. government funds, for example, the government of Kenya and UNICEF, which then ostensibly uses the money for good. But a new study provides more evidence for a growing movement to cut out the middleman and hand money directly to the world’s poorest.

First reported by NPR, the researchers evaluated a program in Kenya that handed out money, unconditionally, to randomly selected people to villages in the Rarieda district, where the average person lives on about a dollar a day. The World Bank’s standard for “extreme poverty” is living on less than $1.25.

It turns out that cash transfers worked. Relative to a control group, the cash recipients ended up 58 percent wealthier, 30 percent less likely to suffer from hunger, and 20 percent better off psychologically, according to a test of “psychological well-being.” The economists even found that every household in villages that received cash transfers saw marked improvements in a measure of “female empowerment,” suggesting cash transfers can also contribute to gender equality.

“We don’t see people spending money on alcohol and tobacco,” Johannes Haushofer, an MIT economist and one of the study’s co-authors, told NPR. “Instead we see them investing in their kids’ education, we see them investing in health care. They buy more and better food.”

This is hardly the first time that cash transfers have been successful. This June, the New York Times ran an interview with Chris Blattman, a development economist at Columbia who has done pioneering work on cash transfers. Blattman broke down two studies he had conducted in Uganda finding similarly impressive decreases in poverty and improvements in well-being from cash-transfers. Read Blattman’s own summary of his research for more impressive details.

What to make of all this? First, it’s another hammer blow to the idea that poor people are dependent moochers who can’t be trusted not to blow free money on booze and gambling. It seems like, shockingly enough, poor people don’t actually like being poor, and will leap at opportunities to escape deprivation.

And make no mistake: the people in question are terribly deprived, in a way that most Americans can’t really imagine. The United States is one of the most unequal countries in the developed world, but most of the bottom fifth of Americans are upper-middle class by global standards. So when we talk global poverty, we’re talking people whose children regularly die of easily preventable diseases and malnutrition — to the tune of nine million dead children per year.

The scale and horror of global poverty is without a doubt the most pressing moral problem of our time. If cash transfers really are an effective way of alleviating its worst symptoms, then we need to get past the image of the dependent poor that so shapes domestic poverty policy. If anything, this fear of dependency could create a self-fulfilling prophecy: assume the poor will waste foreign aid, slash it, and then cite mass participation in, say, a brutal civil war (where armies offer people food and a sense of purpose) as evidence that aid is failing.

This sort of defense of aid, though, raises the second point: we can’t be starry-eyed about aid’s downsides. In an admirably self-critical blog post, Blattman launched a broadside against all of the good press his cash transfer idea has been getting. The message, Blattman writes, is not “Cash transfers to the poor are a panacea.” Rather, “They probably suck less than most of the other things we are doing.” He goes on to suggest that cash transfers won’t work in all cases and are no substitute for well-functioning, productive economies in poor countries.

Blattman’s post on the limitations of his own project for reforming foreign aid is a model for how people committed to helping the world’s poor should think about donation. I’m currently reading Princeton economist Angus Deaton’s The Great Escape, a fantastic book about the origins of global poverty (I’ll have a longer review shortly). Deaton’s humanitarian credentials are unimpeachable, yet he thinks almost all non-health related foreign aid is making global poverty worse. He proposes a variety of alternatives, like massive investments in medical research and cracking down on the small arms trade, that might actually help.

Deaton’s view is highly controversial among development economists, and he hasn’t converted me to the “end aid” cause. But we should be open to the possibility that he’s right, and at the very least figure out a way to address the fairly compelling criticisms he’s launched. Improving foreign aid, and by extension helping save the world’s poorest from truly unconscionable conditions, can be accomplished both by jettisoning repugnant “dependency” thinking and by incorporating the insights of aid’s most reasonable critics.