Cash transfers report

Please note this page was last updated in 2018. While our overall views remain unchanged, some details may be out of date.

The Problem

The World Bank estimates that 770 million people (roughly 10% of the global population) were living in extreme poverty (less than $1.90 a day at purchasing power parity) in 2015. Around half of the people living in extreme poverty are in Sub-Saharan Africa. Poverty is a significant challenge to well-being, and its eradication is a priority goal for development. Lack of economic resources has direct consequences on necessities such as food security, access to healthcare and safe water services.

The Solution

Unconditional cash transfers (UCTs) are one of the most well-studied and effective anti-poverty interventions. UCTs consist of providing households living with money, either as a regular transfer or as a one-off, with no strings attached.

The Evidence

A 2013 randomized controlled trial estimating the effects of transferring money to households living in poverty found that, in the short-term, the transfers increased consumption and the value of assets, such as savings and housing. While there is a widespread concern that cash without strings attached might be spent on harmful products, the study showed that there was no effect on the consumption of tobacco and alcohol, and that recipients overwhelmingly spent the transfers productively and sensibly. The program also improved food security and psychological well-being.

Sources

• Haushofer and Shapiro, “Household Response to Income Changes: Evidence from an Unconditional Cash Transfer Program in Kenya” (2013)
• Sala-i-Martin X. "On the Health-Poverty Trap" Health and economic growth: Findings and policy implications (2005): page 95
• The World Bank. “Poverty” Source (accessed 14th of December 2018)
• The World Bank. “SDG Atlas 2018 - No Poverty” Source (accessed 14th December 2018)
• United Nations. “Millennium Goals - Poverty”. Source (accessed 27th of March 2018)
• Watts MJ and Bohle HG. "The space of vulnerability: the causal structure of hunger and famine" Progress in human geography (1993): pages 43-67
• World Health Organization and UNICEF. “Progress on Drinking Water and Sanitation: 2012 Update” (2012)