The idea behind this is simple. Poor people know what they need, and if you give them money they can buy it.
But to some veterans of the charity world, giving cash is worrisome. When we first reported on this we spoke with Carol Bellamy, who used to run UNICEF, and who said people might spend the money on things like alcohol or gambling.
To see whether this was actually happening, researchers did an experiment. They surveyed people in Kenya who received money from GiveDirectly, and a similar group of people who didn't get money.
The results from the study are encouraging, says Johannes Haushofer, an economist at MIT's Poverty Action Lab who was one of the study's co-authors.
"We don't see people spending money on alcohol and tobacco," he says. "Instead we see them investing in their kids' education, we see them investing in health care. They buy more and better food."
People used the money to buy cows and start businesses. Their kids went hungry less often. ... Paul Niehaus, one of GiveDirectly's founders, does think cash can have long-lasting effects. He points to a similar study in Uganda where the government gave people money and people's incomes went up and stayed up, even years later. People had used the money to start small businesses, like metal working or tailoring clothes.
A 2013 survey by Sarah Bailey for the Canadian Foodgrains Bankinvolving Zimbabwe, Ecuador, Malawi, and Yemen, among other countriesfound that cash transfers usually led to far greater increases in a food consumption score of dietary diversity and food frequency than did similarly priced food delivery. In Malawi, the food consumption score increased by 50 percent for cash recipients compared to 20 percent for food recipients. This despite the fact that households in the countries surveyed only report spending between 45 and 90 percent of the cash they receive on food, with the rest going to expenses like debt repayment, household items, and school fees. ... In India, a pilot program between 2011 and 2012 transferred cashroughly $4 to $6 for adults, and half that amount per childonce a month to every household in select villages in the state of Madhya Pradesh. According to evaluations in 2014 by Indias Self Employed Womens Association, households in recipient villages proved more likely than those in non-recipient villages to have modern toilets and to use public taps or hand pumps for water rather than wells. They also used cooking fuels that produced less indoor air pollution, which is linked with poor respiratory health. Along with money spent on food, all this helps explain why children in transfer villages were healthier. ... As in Kenya, the cash transfers were associated with people working longer hours and making more money thanks to investments in assets including livestock. ... The United States, for its part, tried an unconditional cash-transfer program 40 years ago and found it worked, too. The negative income tax provided cash to low-income recipients across five states in four different experiments between 1968 and 1980. As in the developing world, the payments were associated with reduced child malnutrition, improved school attendance, and growth in household assets. The transfers also had significant effects on childrens test scores.