Cash transfer exuberance: Give a man money to buy a fish

Flickr, Jesse Acosta

Humanitarian hipsters take note: The hottest thing buzzing in the aid and development world these days is the cash transfer!

See that guy on the corner with a cardboard sign asking for money? If he was an aid expert, he’d say what he really wants is an ‘unconditional cash transfer.’

The New York Times recently enthused about new research done in Kenya that discovered if you give poor people money without any strings attached, they actually spend it on things they need like food or home improvements. The researchers discovered that having more money resulted in “increased asset holdings” as well as “psychological well-being.”

Before you say “Duh” here are others who reported this as big news

Economist Pennies from heaven

NPR What happens when you give money to poor people?

SciDev Will scientific study show value of cash donations?

So why is this somewhat obvious finding – that giving money to poor people improves their lives – being treated like a surprise and big news?

Consider these well-known words of wisdom: Give a man a fish and he eats for a day but teach him to fish and he eats for a lifetime.

Many critics of traditional aid, or of charitable endeavors in general, have long attacked what they see as the disempowering nature of simply giving the poor food, clothing, drugs or even a fish.

The controversial economist Dambisa Moyo is perhaps the poster child for this perspective, arguing in her book Dead Aid that this approach (other than for disasters or emergencies) just further entrenches the poor in dependency and also undermines governments in poor countries. Bill Gates, a proponent of foreign aid, once (very uncharacteristically) called Moyo’s ideas evil.

Those who at least partially agree with Moyo’s contention, that traditional aid often doesn’t work to reduce poverty and inequity, often contend that what’s needed is to move away from old-fashioned aid and employ anti-poverty investments or strategies that are, well, more akin to teaching a man to fish rather than handing him a dead cod. Yet now some of the same cognoscenti are all excited about cash transfers as the next, new big thing for fighting poverty and inequity.

Chris Blattman The Cashonistas rejoice

World Bank Thoughts on the GiveDirectly Impact Evaluation

Amanda Glassman Cash transfers and the deeper causes of poverty

(Editor’s note: Glassman, Blattman and Charles Kenny have given me a bit of grief on Twitter for implying that they share the same views on foreign aid and development as Moyo. Fair enough. I didn’t mean to imply that. All I meant was that many experts who advocate moving away from the charitable mindset on aid and development – which I think they all do – nevertheless favor the cash transfer, which looks a lot like simple charity to me.)

Because the proponents of this approach are mostly economists and academics, they don’t call this ‘giving money to poor people.’ That would be too obvious. So they call it a cash transfer. And there are two flavors – conditional and unconditional. Conditional cash transfers mean giving people money with conditions, with strings attached. Unconditional cash transfer is, essentially, like handing a fiver to that guy on the corner with the cardboard sign.

What’s so fascinating is that these experts appear to be saying we don’t even need to give the poor guy a fish. We don’t have to actually engage with this poor fishless wretch to teach him anything. Just give the guy money and walk away. Easy peasy!

Perhaps the next most obvious question the experts can try to answer is if the concentration of wealth worldwide has anything to do with why people are poor – and if rather than just finding a new patronage approach to fighting poverty we can adopt an equity approach. Those tax havens seem like a good place to start.

New suggested mantra: You can give a man a fish or some money and he will be able to buy a beer to chase down his fish and chips. Or you can teach him how to get more money by fighting to repair the many structural root causes of his poverty. I don’t think that will catch on….

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About Author

Tom Paulson

Tom Paulson is founder and lead journalist at Humanosphere. Prior to operating this online news site, he reported on science,  medicine, health policy, aid and development for the Seattle Post-Intelligencer. Contact him at tom[at]humanosphere.org or follow him on Twitter @tompaulson.

  • Vestias

    A uma pessoa quando da dinheiro a uma pessoa pobre essa pessoa é inteligente porque não gosta de ver as pessoas a passarem mal Mas infelizmente ainda existe no mundo muita descriminação Eu creu que só á um caminho e os poderes politicos dos estados globais criarem uma estratégia nacionais de sistemas sociais os investimentos na pobreza são importante porque depois aparece o retorno

  • Amos – Give Aid Direct

    Thanks for the critique Tom – I tend to agree that positioning unconditional cash transfers as the magic bullet is silly and doomed to fail, but the same should be said about a more traditional aid approach. To me, they should complement each and we should be asking how the role of the intermediary needs to change. At Give Aid Direct (http://www.giveaiddirect.com/) we are trying to do that – we are using technology to improve the speed at which cash transfers can be done, but at the same time wanting to work alongside of traditional aid as there will always be some things that cash transfers will never be able to do. So isn’t it a question of how we make it a “both/and” not an “either/or”?

    • I agree. What’s so great about the cash transfer approach, and the studies showing positive impact, is that it contradicts those who think the poor won’t make best use of such assistance. It turns out, poor families are probably much more prudent about making best use of the money than most of the rest of us would be (including aid organizations).

      On the flip side, I find it interesting that this is so popular an idea among those who also argue that simple charity is actually harmful to the poor. What makes an ‘unconditional cash transfer’ different from a hand-out? Seems largely rhetorical to me, but maybe I’m missing something.

      As I note at the bottom of the post, maybe what’s needed here is to stop figuring out the best patronage approach to reducing poverty and focus on the equity approach. That is – If cash transfers work so well, perhaps the next stage of ‘innovation’ in the fight against poverty should be to look at more systemic redistributions of wealth, like fighting global tax evasion.

      Cheers