Pennies From Heaven-Giving no-strings-attached $ to world's poorest produces remarkably good results

[kpete]

Giving no-strings-attached money to the world's poorest produces remarkably good results
Cory Doctorow at 11:56 am Mon, Oct 28, 2013

The Economist details outcomes from Give Directly, an organization that analyzes satellite photos to identify the poorest places in the world and then hands over no-strings-attached cash grants to the people who live there. It's a contrast to other programs, where donations are funneled into school construction or funding planned-out businesses. Give Directly has produced remarkably good results: "In randomly selected poor households in 63 villages that have received the windfalls, they say, the number of children going without food for a day has fallen by over a third and livestock holdings have risen by half. A year after the scheme began, incomes have gone up by a quarter and recipients seem less stressed, according to tests of their cortisol levels."

For decades, it was thought that the poor needed almost everything done for them and that experts knew best what this was. Few people would trust anyone to spend $1,000 responsibly. Instead, governments, charities and development banks built schools and hospitals, roads and ports, irrigation pipes and electric cables. And they set up big bureaucracies to run it all.


Still, this is not the only cash giveaway. A trial in Vietnam in 2006 gave one-off handouts to 550 households; two years later, local poverty rates had fallen by 20 percentage points. The scheme was dubbed “cash for coffins” after elderly recipients spent the money on their funeral arrangements to save their children the expense.

A different scheme has been running in northern Uganda for four years. The government gives lump sums of around $10,000 to groups of 20 or so young people who club together to apply. Chris Blattman of Columbia University, New York, who has studied the programme, calls it “wildly successful”. Recipients spent a third of the money learning a trade (such as metalworking or tailoring) and much of the rest on tools and stock. They set up enterprises and work longer hours in their new trades. Average earnings rose by almost 50% in four years.

This scheme has a condition: applicants must submit a business plan. But it highlights the virtues of no-strings grants (UCTs). They work when lack of money is the main problem. The people who do best are those with the least to start with (in Uganda, that especially means poor women). In such conditions, the schemes provide better returns than job-training programmes that mainstream aid agencies favour. Remarkably, they even do better than secondary education, which pushes up wages in poor countries by 10-15% for each extra year of schooling. This may be because recipients know what they need better than donors do—a core advantage of no-strings schemes. They also outscore conditional transfers, because some families eligible for these fail to meet the conditions through no fault of their own (if they live too far from a school, for instance).

MORE:
http://www.economist.com/news/international/21588385-giving-money-directly-poor-people-works-surprisingly-well-it-cannot-deal




Are you listening GOP?

What Happens When You Just Give Money To Poor People?

The idea behind this is simple. Poor people know what they need, and if you give them money they can buy it.



.............

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.

http://www.npr.org/blogs/money/2013/10/25/240590433/what-happens-when-you-just-give-money-to-poor-people

http://boingboing.net/2013/10/28/giving-no-strings-attached-mon.html

[postulater]

1. But, but, but! Aren't these ENTITLEMENTS!

How could that be?

When people have money, children don't go hungry?

When people are able to invest in their skills, they are actually productive?

<end snark>

Seriously, this is exactly what the repubs are afraid of. What if there were no poor? Then there wouldn't be anyone to be better than.

[Control-Z]

14. Exactly.

"What if there were no poor? Then there wouldn't be anyone to be better than. "

It is what drives republicans to hate the ACA. It's a threat to them. If devalues their own health care when everyone else gets to have health care. How could something that everyone has be good enough for them?

[Egalitarian Thug]

2. Every good conservative knows that this doesn't work. People are inherently dishonest

and won't work unless they are forced.

[eggplant]

3. Well, that's certainly been true of the House Republicans. n/t

[panader0]

6. That might be a DUZY.

[Egalitarian Thug]

9. We do judge others based on ourselves.

It is simple and it has always proven to be true for me. Whenever I've met someone that believes that people are dishonest, lazy, violent, and thoroughly self-absorbed, they have invariably turned out to themselves be, dishonest, lazy, violent, and thoroughly self-absorbed.

Every conservative I've met (regardless of party) that has similar beliefs has. given the opportunity, demonstrated exactly the traits they ascribe to humanity in general.

A note to the young: If you pay attention to this and verify it for your self and act on it, you can avoid at least a couple of dozen painful and expensive lessons

[laundry_queen]

10. Yes. yesyesyesyes.

I totally agree and I wish I would've learned this lesson before....well...when I was younger, lol. But it's SO true. And yes, I've told my teens about this, I hope they listen.

[Egalitarian Thug]

11. Thank you. You and me both.

It's also very helpful here on DU as well.

I think it was George Bernard Shaw that said "youth is wasted on the young."

[eggplant]

17. You can't teach this lesson -- you have to learn it.

Good judgment comes from experience. Experience comes from bad judgment.

[pampango]

16. They know the poor will just get drunk or high if they come into a "windfall".

Of course, the reality of what happens is of little relevance to conservatives. Sticking to their story line is what matters.

[True Blue Door]

4. Superb demonstration of how economics really works.

Too much money in the hands of a few is just wasted on economically moribund luxuries that don't pay forward. E.g., when you pay to make a solid gold toilet, the invested wealth just sits there - it doesn't contribute any more to the economy on an ongoing basis than any other kind of toilet. But when you pay for a poor person's nutrition and education, it unlocks neglected potential and yields a net benefit to society.

Another thing this shows is the value of randomness in economics. When there's too much wealth inequality, nothing ever changes - new people can't come into wealth, and old money never leaves it. And lotteries only partly help, but are usually not that helpful because they simply redistribute money from a lot of poor people to a handful of other poor people. Lotteries that redistribute from the rich to the poor would be vastly more effective, and this sounds kind of like that. It's also important that randomness be involved because otherwise charities become rich people picking winners according to what they think others deserve, which just reinforces their disproportionate class power.

[Egalitarian Thug]

12. But that's exactly why servitude is essential to the parasite class.

If a parasite were to pay for the nutrition and education of a poor youth, they feel they are then entitled to the product of that youth.

[Control-Z]

15. And your explanation, True Blue Door, is superb!

Welcome to DU! You are going to fit in quite well here, I believe, and I look forward to more of your posts in the future!!

[SheilaT]

5. This also points to the fact that most people really would rather work

and earn money than not. Plus, as was pointed out, the fact that those closest know exactly what is needed.

[Uncle Joe]

7. Kicked and recommended.

P.S. kpete you didn't adopt me, I adopted you.

[bemildred]

8. Duh. If they survive on nothing, they can sure as hell do better with something. nt

[Recursion]

13. There was a much-mocked UN study titled "World's Poor Need Money"

But what I think a lot of the mockers don't get is that that is exactly the opposite of what people in aid and development have been saying for decades, and it needed to be said.

[xchrom]

18. Du rec.