Thursday, 28 October 2010

Newsweek: "New Fix for the Needy"

Okay, it's not really new and it certainly isn't a quick fix but it is a Newsweek article on one of my favourite topics in development: cash transfers. In particular, unconditional cash transfers (UCTs). The basic logic of cash transfers is this: poverty (or vulnerability to external shocks, to use the more accurate term) is not about the lack of resources, especially in middle-income countries, it is about how those resources are distributed. This suggests that what the poor face every day is not just a lack of things but a lack of a way to get the things they need. Quite often, these things are intangible. For example, (predominantly) girl-children might be kept out of school to provide household labour or care for ill relatives.

Traditional aid/development models would look at structural ways to address this: build better schools, make it illegal for children to be out of school and hire people to police this, fine or arrest parents whose children are not in school, provide school lunches, send social-workers door-to-door to check up on children, hire more social workers.

These solutions are costly and ultimately, if the family sees the labour of the child as more crucial to their survival than her education, none will serve to do anything except create animosity between the poor and the law. Cash transfers, on the other hand, have been shown, as the article points out, to reduce the number of children out of school and the number of days of school missed by girl-children in particular.

And yet, this relatively low-cost and cost-effective intervention with clear results is reviled by many people, quite often including tax payers. The article mentions South Africa's child-support grant. A few years ago, this grant was heavily criticized in many circles as urban legends circulated about teenage girls intentionally falling pregnant in order to access the grant. The perception is that grants encourage dependence. This is made worse by an apparently widespread belief that the poor are irresponsible and so cannot be trusted to spend the money they get.

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