This is from Berk Ozler over at Development Impact (which you should all be reading religiously, btw):

……. An increasing number of studies show short-term effects of cash transfers dissipating over time, at varying speeds of decay. But, more on that below… What did surprise me is that I had to read the transcript of the interview to find out about this new finding (no working paper yet, it seems, but here is an abstract). No one was tweeting about the massive four-year effects disappearing: remember that women almost doubled their income compared to the control group five years earlier. It’s not news that these effects are gone?

We are all guilty. If the quote had been about the durability of the effects of cash transfers – even at half of the short- and medium-term levels – many of my tweeps would be shouting it from the rooftops. Why? Because, we disseminate evidence that reinforces our view of the world, but choose to ignore or rationalize away stuff that does not. That may help to keep oneself sane these days, but a good public academic it does not make. Most of us think we’re better than that but we are fooling ourselves. Yes, many of you will politely retweet one of my posts about this or that hype about cash transfers, but deep down you know what you think: unconditional cash transfers are great and there is not a thing any researcher can do about it…

Even in the most favorable interpretation of these new findings, however, the fact remains that there is no treatment effect of cash transfers on beneficiary households other than a sizeable increase in non-land assets, which are held mostly in improved roofs and livestock. This new paper and Blattman’s (forthcoming) work mentioned above join a growing list of papers finding short-term impacts of unconditional cash transfers that fade away over time: Hicks et al. (2017), Brudevold et al. (2017), Baird et al. (2018, supplemental online materials). In fact, the final slide in Hicks et al. states: “Cash effects dissipate quickly, similar to Brudevold et al. (2017), but different to Blattman et al. (2014).” If only they were presenting a couple of months later…

Cash transfers do have a lot of beneficial effects – depending on the target group, accompanying interventions, and various design parameters, but that discussion is for my next post…

Quick thoughts:

1. Give Directly and the research agenda around their interventions have been great for showing the many ways in which targeted welfare provision can be structured to increase levels of household consumption and investment. I am curious to see the economic impact of their UBI project being rolled out in Kenya. Also, I don’t think that they would deliberately under-publicize unfavorable research findings — see here. Looking forward to the full range of research findings from their previous interventions.
2. In addition to increasing household consumption (direct cash), we should also be thinking about ways to improve the provision of public goods and services — perhaps by doing the two together.

The other implication here (attributable to Justin Sandefur) is that may be cash transfers would work if they were part of a permanent welfare system.

But are the Malawis of this world (fiscally and politically) really ready for this? Should Malawian policymakers instead be spending their precious time worrying about agricultural productivity and getting their jobless youth into factory work?

All to say that more research is needed on cash transfers, especially with a focus on the political economy implications of such policy proposals and in conjunction with some public goods component.