Show Them the Money

Robert just read the article “Show Them the Money: Why Giving Cash Helps Alleviate Poverty,” in Foreign Affairs Quarterly.

The article, written by a couple professors, claims there in increasing evidence that the best way to help the poor is not for aid organizations to give them stuff like cows and training, but rather to simply give them cash.  It has a much higher return on investment by eliminating the cost of delivery.  For example, it was found that delivering a single pregnant cow to a poor person costs Heifer International up to $3,000.  Many of the common arguments against giving cash  (e.g., that the money will be wasted) are just not true. The article cites an experiment in which grants of $200 were given to some of the least disciplined men to be found: drug addicts and petty criminals in the slums of Liberia.  Bucking expectations, these recipients did not waste the money. They spent it on basic necessities and on starting businesses. The poor know exactly what it is best for them to spend the money on, and giving them cash gives them flexibility. This idea matches Robert’s existing beliefs. Robert has had this idea since his school-building project in Nicaragua. Giving money to families may have been better and much more efficient than dealing with the logistical complexities and expense of planning, getting permission for, and building a school.

Here’s a website of a charity that identifies poor families and transfers cash. They claim that 90% of contributions get to the hands of poor people in East Africa.  Sounds good.