May 02, 2018
From the article:
“Just give people money.” For several years now, that has been the mantra of some of the leading voices in development economics, like those of Chris Blattman and Paul Niehaus who argued back in 2014 in Foreign Affairs that foreign aid is wasted on cows and chickens, microcredit, or vocational training, and we should focus instead on just giving people what they really need—cold, hard cash. So the wonkier corners of the global development blogosphere and twitterverse got quite worked up a couple weeks ago when the World Bank’s Berk Ozler dissected the results of a new long-term study of cash transfer recipients run by the NGO GiveDirectly in Kenya, arguing there was little evidence of long-term benefit, some evidence of harm to neighbors, and accusing cash transfer advocates of ignoring inconvenient facts.
Don’t panic yet, cashonistas.
Unless cash recipients literally spent the money on gasoline to set fire to their neighbors' farms, the scope of negative spillovers required to explain the Kenya results seems implausible. Ozler is right that we can’t formally rule out the possibility, but for policy audiences this is probably too pessimistic a summary of what happened in Kenya.