BSP_Vol7Issue1_Interior_final.indd 70 6/15/21 10:06 PM field review Behavioral insights into cash transfers to families with children Lisa A. Gennetian, Eldar Shafir, J. Lawrence Aber, & Jacobus de Hoop

abstract 1 Cash transfer programs aim to lessen the harmful effects of economic deprivation by giving cash or its equivalent directly to people in need. In this article, we combine insights from three areas of behavioral science— economics, child development, and cognitive psychology (including behavioral economics and the psychology of poverty)—to shed light on the logic behind providing cash transfers to families with children and to identify specific design features that policymakers should consider when creating these programs. We also summarize key research findings on the outcomes of such programs and present case studies of projects that have been evaluated in randomized controlled studies. We argue that unconditional cash transfers (which provide the money with no strings attached) are preferable to conditional cash transfers (which require recipients to meet specified conditions) for providing economic security and improving children’s life outcomes. Conditional cash transfers can achieve similar goals, however, if they impose little administrative burden on parents and if infrastructure is in place to support meeting the conditions for receiving the cash. We end with recommendations for how best to design cash transfer programs for families with children.

Gennetian, L. A., Shafir, E., Aber, J. L., & de Hoop, J. (2021). Behavioral insights into cash transfers to families with children. Behavioral Science & Policy, 7(1), 71–92.

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BSP_Vol7Issue1_Interior_final.indd 71 6/15/21 10:06 PM undreds of millions of children around In light of the dire risks that poverty poses to the world live in poverty.1 Indeed, even children, we examine in this article the ratio- Hbefore the COVID-19 pandemic, more nale for providing cash transfers specifically to than 20% of children below the age of 5 years families with children, and we make recommen- lived in poverty in the United States, and an equal dations for enhancing the effectiveness of such proportion lived in extreme poverty worldwide, programs. Knowing that children thrive when according to official poverty measures.2 they have stable, nurturing environments; set routines; responsive parenting; and good health w It is now all too clear that economic deprivation care, nutrition, and education, we have as our and financial instability can pose severe risks ultimate goal understanding how cash transfer Core Findings to children beyond immediate consequences programs can best support parents’ efforts to like hunger and homelessness. More than 250 give their children a fair shot at future economic What is the issue? million children under 5 years of age in devel- security and the opportunity to reach their full Children in families facing oping countries are estimated to be at risk of potential. We also argue that parents should be economic precarity are missing standard cognitive or health devel- supported in ways that respect their dignity and exposed to a number of risks that affect their opmental milestones because of conditions agency, preserving their right to make decisions long-term cognitive and stemming from poverty.3,4 The National Acad- for themselves and their family. health development. To emies of Sciences, Engineering, and Medicine combat this, policymakers have increasingly turned have reported that in the United States, We apply an interdisciplinary lens to the under- to cash transfers in times standing of how cash transfers affect recipients, of crisis. But the type of on average, a child growing up in a family incorporating insights not only from classical cash transfer matters for whose income is below the poverty line economic and child development theories but efficacy. Upon review, we find that unconditional experiences worse outcomes than a child also from cognitive psychology, particularly cash transfers should be from a wealthier family in virtually every behavioral economics. Behavioral economics preferred where possible. dimension, from physical and mental explores unconscious cognitive processes that health, to educational attainment and influence people’s decisions and behavior and How can you act? Selected recommendations labor market success, to risky behaviors recognizes how the context of poverty drains include: and delinquency.5 mental resources. Our analysis illuminates the 1) Directing cash transfers features that policymakers should consider to families with children for an amount that is (See note A.) Reducing the prevalence and child when designing and implementing a cash at least 20%–25% of a development consequences of poverty should transfer program—such as whether the program region’s poverty threshold therefore be a global policy aim.6 should provide money without strings attached 2) Using debit cards as a or set certain behaviors as conditions—and money-provision vehicle for a seamless, easy-to- Even in politically stable countries, families it indicates that specific behavioral science– access delivery system can end up in financially precarious states for informed design features can be incorporated any number of reasons, such as unsteady, into cash transfer policies to harness human Who should take low-paying jobs; permanent decreases in the agency in support of families’ and children’s the lead? demand for low-skill workers in an industry; lack economic well-being. We also draw insights Researchers, policymakers, and philanthropists of access to low-interest credit; unexpected from selected studies of cash transfer programs focused on child natural disasters and economic crises; and from around the world that target families with development, economics, the failure of governmental or private support children and from several programs that have education, health, or labor programs to provide sufficient food, shelter, and been formally evaluated through a randomized other necessities. To alleviate the consequences controlled design. of economic precarity, governments often turn to cash transfers—the direct delivery of money We conclude that cash transfers targeted to or its equivalent (such as debit cards) to be families with children are an effective strategy expended as recipients deem necessary. Cash for enriching children’s environments and transfers are increasingly being used by coun- their development but could be improved by tries around the globe, although only a minority implementing the design strategies that we of the world’s population has access to them.7,8 outline. We also conclude that combining cash transfer policies with targeted investments in

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BSP_Vol7Issue1_Interior_final.indd 72 6/15/21 10:06 PM early childhood development could generate recommended a bundle of policies, including outsized improvements in children’s environ- a refundable child tax credit in which larger ments and development. refunds go to families with children younger than 5 years of age as well as a monthly allow- ance for each child under 17 years of age in a Basics family.5 As this article is being written, lawmakers Cash transfers are one approach among many and the Biden administration are considering that can be applied to combat poverty in fami- several child allowance proposals for families lies with children. Other types of programs in the United States. Organizations like UNICEF provide specific services, such as health care, advocate for and sometimes assist in imple- housing, early literacy training, or mental health menting cash transfers that provide immediate counseling, rather than money. Such strategies economic resources to displaced families. can achieve narrowly defined outcomes but usually work only in specific locales and often As briefly mentioned earlier, cash transfers are not scalable.9 Moreover, interventions that often take one of two basic forms. Uncondi- require certain behaviors, such as attending tional transfers enable recipients to receive the literacy classes, are likely to fail if families lack money with no strings attached. These transfers the stability and economic resources needed can be one-time outlays or provided at regular to reap the program’s full benefits.10 Further, intervals for a period of time. The programs rest although strategies to supplement services or on the assumption that adults want the best for build infrastructure are well intended, they often their children, know what is good for their fami- fail to reach income-poor people in a timely lies, and can be trusted to spend their income manner, at the moments when they are needed accordingly. The programs can also be rela- most. tively cost efficient in that they do not incur the administrative expenses of setting up and main- Giving money directly to recipients avoids these taining the infrastructure for providing specific drawbacks. Cash transfer programs, which are services or goods. often government sponsored, usually have the dual aim of alleviating the detrimental effects Unconditional programs, however, can run of economic deprivation on families with chil- into political opposition, primarily by people dren while at the same time supporting the who fear that the cash will encourage people productivity of the children’s caregivers (that to not work (and will thus fuel dependency is, their ability to work).11,12 For instance, an on handouts and drain government budgets)13 infusion of money might enable a parent to and that recipients will squander the money on afford the childcare that makes holding a job vices such as alcohol or cigarettes. Research possible. Giving people cash to meet their basic does not support these beliefs, but the oppo- day-to-day needs is also the ethical thing to sition persists. Not surprisingly, governments do, in accordance with the principles of human in nations where a greater share of the popu- rights, dignity, and social equity. lace attributes poverty to laziness spend a lower proportion of the gross domestic product on Governments and humanitarian aid orga- cash transfers.14 nizations around the globe recognize the importance of cash as an economic support. One response to the critiques is to implement For example, in 2016, Canada introduced the conditional cash transfer programs, which Canada Child Benefit program, which provides provide money on the condition that would-be from Can$5,000 to Can$6,400 per year to recipients perform selected behaviors thought qualifying families, depending on the fami- to be beneficial to them and society at large.15 ly’s income and children’s ages (see note B). In Proponents of conditional transfers argue that the United States, to meet the goal of reducing these programs can help to address what econ- child poverty by half, the National Academies omists call externalities: the costs or benefits to of Sciences, Engineering, and Medicine have society of someone’s behavior.16 For instance,

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BSP_Vol7Issue1_Interior_final.indd 73 6/15/21 10:06 PM recipients’ valuation of the benefits of school been embraced by mayors across the country.22 participation might not match society’s valua- Universal basic income is a promising idea and tion, which may emphasize the future benefit appealing in its administrative simplicity, but we of producing a skilled workforce. Conditional do not discuss it in depth in this article because transfers targeted to schooling may encourage it does not yet have a well-established evidence parents to invest effort and time in making base and its effects specifically on families with sure their children attend class regularly. Some children remain unclear. proponents also argue that conditional trans- fers help policymakers counteract a purported culture of poverty among recipients—a concept Theoretical Bases for presuming that the norms and values of recip- Cash Transfers ients favor behaviors that are detrimental to When seeking insights into optimizing the the recipients themselves and to society.17 For design of cash transfer programs, we adopted such reasons, conditional cash transfers have an interdisciplinary approach that incorporated become one of the most widely practiced anti- concepts from cognitive psychology, because poverty initiatives in the developing world.18,19 the standard economic and child development rationales on their own fall short in offering Because conditional cash transfers are guidance. perceived to reward what the program devel- opers consider good behavior and to strengthen The Classic Economic Lens the impression that a desired behavior is a Classical economists justify cash transfer norm to be followed, they are thought to be programs mainly on the basis of the programs’ an efficient way to achieve socially desirable ability to efficiently provide the money needed ends. They may also be necessary at times for for goods and services when the marketplace making cash handouts palatable to politicians fails to stably provide the required income. Text- and voters. One concern, however, is that they book economic theory assumes that people may dampen intrinsic motivation to perform are fully rational and optimize their decisions the targeted behaviors, with the result that the by carefully weighing all the factors that could behavior disappears when the rewards go away. affect the resulting outcomes, regardless of the (It is conceivable, though, that a behavior initially contexts people find themselves in. Economic performed to obtain some external reward will theory would suggest, for instance, that a cash eventually be experienced as worth doing on its transfer program conditioned on children own merits).20 attending a given school will invariably increase attendance because parents will see atten- Studies of cash transfer programs have shown dance as providing a tangible and immediate that each type of program can be beneficial. economic benefit. Yet it has become abundantly On balance, we view unconditional cash trans- clear that people often do not behave in the fers as preferable and optimal, for reasons we ways that rationality assumptions predict. explain later. The Child Development Lens We should note that the unconditional cash Child development theory supports the value transfers we emphasize in this article differ from of cash transfers. However, it falls short on universal basic income, which is money given guidance for an optimal cash-transfer program regularly to everyone in a population regardless because, like economic theory, it assumes that of need. (See note C.) A universal basic income parents can be perfect decisionmakers and are has been famously advocated by Facebook not distracted by juggling multiple responsibili- cofounder Chris Hughes21 and by former pres- ties and challenges. In line with that view, some idential candidate Andrew Yang, who during child development authorities favor conditional the 2020 campaign proposed giving all Amer- transfers meant to encourage parents to behave ican adults $1,000 a month. The idea has also in specific ways.

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BSP_Vol7Issue1_Interior_final.indd 74 6/15/21 10:06 PM Cash transfers that are conditioned on parents Research into the psychology of poverty indi- performing behaviors known to support cates that poverty and economic instability children’s development (such as reading to create high cognitive loads and attentional youngsters) have, indeed, been shown to be demands that drain the mental resources able to shape children’s outcomes.14 As we required for parents to work efficiently, care for demonstrate in the next section, however, their children effectively, and engage in civic unconditional transfers have been hypothesized life.18,25–27 In other words, parents who live in to also improve parenting, in part by relieving poverty and lack a steady income have a lot on stress and fostering senses of competence, their minds and a lot of stress, and both condi- autonomy, and readiness to invest in child tions can distract them from concentrating development. fully on the decisions they make and giving their children the attention they might need— Research suggests that proper timing of either whether for learning, emotional growth, or conditional or unconditional cash transfers can regular visits to health care providers. They have optimize child development—that is, it makes to care for their children while also contending sense to deliver money that will help meet basic with stressful issues such as which bills will have needs during periods when children usually to go unpaid for the month, whether to borrow 20% meet milestones important to future develop- money from unscrupulous payday lenders, and Children* living in poverty 23 ment (such as learning to speak and read). how to keep their families safe. in the United States In the case of conditional cash transfers, for pre-COVID example, the power of incentives to get chil- The behavioral economic perspective further dren to attend school can vary with a child’s suggests that cash transfer programs that age. In general, though, evidence from develop- impose multiple demands or require recipients mental neuroscience suggests it is particularly to follow detailed instructions can increase the 20% important to stabilize basic material conditions already high cognitive demands on parents in Children* living in extreme and economic resources in the earliest years ways that ultimately interfere with their ability to poverty globally pre-COVID of children’s brain development (that is, during reap the programs’ intended benefits—even if, in infancy and toddlerhood)—a period when adults theory, the programs would efficiently enhance generally have difficulty meeting work and other earnings, savings, parenting, and child develop- demands on top of accommodating the needs ment outcomes. Conditional programs require 24 250m of their children. more attention and planning from recipients Children* in developing than unconditional programs do. For example, countries at risk of The Cognitive Psychology Lens a chronic lack of resources may activate several missing developmental The cognitive psychology perspective on cash related biases that can deter parents from milestones because of poverty transfers acknowledges that, when making participating in programs intended to promote decisions, human beings do not reason as a saving for education: present bias favors

computer would: their decisions are affected spending money to relieve current pressures *under 5 years old by their emotions, state of mind, and limited rather than putting it aside for the future, loss bandwidth for attending to the decisions at aversion promotes avoiding earmarking money hand. This perspective draws from research into for education when the payoffs of that action both the psychology of poverty and behavioral are unclear, and the discounting of future bene- economics. Behavioral economics research fits leads people to place more value on benefits has shown, for example, that people have a they see immediately than on potentially bigger tendency, or bias, toward satisfying needs benefits they might receive in the future.18 immediately rather than worrying about future needs (known as present bias), for taking the The behavioral economics lens suggests, path of least resistance, and for giving extra therefore, that unconditional cash transfer weight to whatever is most salient in their minds programs could be more effective than condi- at the time a decision is being made. tional programs, especially if they deliver a guaranteed, predictable income. By providing

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BSP_Vol7Issue1_Interior_final.indd 75 6/15/21 10:06 PM outside authority (and can require both recip- “unconditional cash transfers ients and cash providers to coordinate their activities and manage paperwork and time), may also free up parental whereas unconditional cash transfers are driven by the presumption that parents are best suited time and mental energy” to make decisions about how to allocate money and are hampered mostly by the demands much-needed money, they should alleviate the created by having low, unstable, and uncertain challenges of juggling and preoccupation, thus resources. improving parents’ capacity to manage their day-to-day lives, to make and follow through on near- and long-term decisions for their children, Policy Design Considerations and to engage in more attentive parenting. By The interdisciplinary lens contributes in two lessening financial stress and increasing finan- key ways to the policy conversation about cial stability, unconditional cash transfers may cash transfers to families with children. First, also free up parental time and mental energy, at a broad societal level, it emphasizes the thereby allowing caregivers and their children to importance of respecting parental agency and take advantage of educational or other oppor- children’s rights,30 while attempting to coun- tunities offered to them.28,29 teract the job market failures that are especially pernicious for economically vulnerable families. What is more, by empowering and enabling Second, at the specific operational level, it points parents to invest in their children and their envi- to an array of design considerations—described ronments as they see fit—and thus showing next—that can influence how well cash trans- trust in the adults’ parenting behaviors and fers serve children, families, and society at large. related investment decisions—unconditional Behavioral economics, in particular, teaches cash transfer programs should reduce stress that details of design can influence how people levels in the family as a whole and improve react to a program, which, in turn, can affect the family climates. Ultimately, by fostering senses program’s effectiveness. of competency and autonomy, unconditional cash transfers can also reinforce in parents the Type of Transfer intrinsic value of spending quality time with As we have noted, cash transfer programs are their children and creating environments that either unconditional or conditional. Uncondi- enhance the children’s welfare. tional transfers can be delivered once or on a regular basis. Use of one-time transfers is gener- The Interdisciplinary Lens ally based on the assumption that the funds In short, insights from cognitive psychology will be invested in a way that produces a future reinforce the classic economic and child devel- stream of income, such as to buy livestock or opment arguments in favor of providing cash start a small business. Lump sums have yielded transfers to families with children. They also mixed results,31–33 possibly because of variations teach that conditional and unconditional cash in the availability of investment opportunities, in transfers each can free up parents’ emotional the market infrastructure, and in how well recip- and cognitive resources to support senses of ients transform the cash infusion into a future self-efficacy, autonomy, and competence— stream of income. essential characteristics that are often taxed when finances are unstable and resources are Research into the psychology of poverty and scarce. These characteristics, when promoted behavioral economics suggests that ongoing in parents and their households, are favorably unconditional transfers are more likely than associated with supportive environments for conditional transfers to be effective for families children.18 In the case of conditional cash trans- with children because they can liberate parents fers, desired behaviors are determined by an from many of the cognitive demands placed

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BSP_Vol7Issue1_Interior_final.indd 76 6/15/21 10:06 PM on them when they are struggling to figure out and services, delivered locally through inde- how to cover their family’s needs using low pendent institutions, or distributed in another and unstable economic resources.34 They may way—can matter for outcomes as well. The also be useful when recipients who are already delivery method may affect which recipients coping with multiple demands would feel even are reached seamlessly and which are reluctant more burdened by having to meet the require- to participate because they feel stigmatized by ments of conditional transfers. However, when the program or distrustful of the organization public and political will to support unconditional administering the program. cash transfers is undermined by perceptions that income-poor people are undeserving,35 In the United States, tax refunds can be a conditional transfers may be the most politically vehicle for providing funds to a broad swath of feasible option. the population, and eligibility for the refunds is easy to verify. But, as the COVID-19 stim- At least one study shows that unconditional ulus payments in the spring of 2020 illustrated, programs might be able to nudge recipients this approach can bypass people with incomes toward selected goals without making formal too low to require tax filing. For such reasons, demands on them. In Morocco, a cash transfer various U.S. organizations opt for a boots-on- program provided unconditional cash benefits the-ground approach, working with partners in but explicitly messaged that the benefits were local communities to reach the most econom- meant to support children’s school participation. ically vulnerable people in person. Delivery The program led to substantial improvements in through the Social Security system is also under education outcomes36,37—a result that did not consideration in the United States as this article differ much from those obtained when cash is being written. transfers were provided on the explicit condi- tion that the recipients’ children attend school. To avoid the security risks inherent in handing out literal cash, many programs rely on debit Providing unconditional cash transfers to cards for providing money. Other options are every household in a given population is available as well, such as cash-exchange apps another option. As with unconditional transfers on cell phones. targeted to selected families, these transfers can face strong political headwinds. They can, Amount, Frequency, however, also avoid some unintended negative Predictability, & Timing consequences of typical unconditional cash The amount, frequency, predictability, and transfers,38 such as price inflation or pressure on timing of a cash transfer can significantly affect recipients from nonrecipients who want access the transfer’s effectiveness. These factors are to the funds. In places where the cash conferred often influenced by government budgets and on some recipients leads to rising prices for food politics. or other items, the well-being of nonrecipients can be compromised when their buying power Small cash amounts can increase the salience is reduced. In an emergency situation (such as a of the need to adopt certain behaviors today pandemic or war) requiring a fast response that to attain long-term or future benefits, but would be hampered by having to assess quali- small sums are unlikely to significantly ease the fications, one-time cash transfers to everyone stress of impoverished and unstable day-to-day in a community may be the most logistically economic conditions. Large amounts can feasible option. reduce demands on a recipient’s cognitive resources and thus are more likely to support Delivery Mechanism greater behavioral change. The mechanism of delivery—whether cash transfers are provided by charitable agencies, One-time lump-sum transfers may be the integrated into existing government platforms most feasible in terms of garnering political

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BSP_Vol7Issue1_Interior_final.indd 77 6/15/21 10:06 PM support expediently, such as when used in a promote such saving. For instance, economic rapid response to an economic crisis. However, instruments known as commitment savings effective use of a single large sum depends on accounts involve stowing some portion of one’s recipients having the cognitive bandwidth to money in an untouchable fund until a certain allocate the money carefully for current and condition (such as an emergency) has arisen or upcoming demands. Delivery of large sums a set time period has passed.39 repeatedly on a predictable schedule would be most likely to help recipients address financial In general, extending the period of cash transfer constraints and reduce debt. Frequent (such as delivery should encourage people to make monthly), predictable payments minimize the incremental contributions to a financial cushion, challenges of juggling and can alleviate cogni- thereby supporting their sense of control over tive resource constraints. their finances as well as their economic secu- rity and mobility. Program designers need to The wisdom of delivering large sums on a keep in mind, however, that even when they predictable schedule, even if only once a year, clearly communicate the program’s parameters is supported by studies of the annual earned and end date, recipients may face financial and income tax credit refund available to eligible psychological hurdles when the transfers cease, low-earning tax filers in the United States,31 such as loss of trust in the institution that had whereas the random delivery of a single large been providing the money and renewed stress sum has not been shown to produce equivalent over finances. benefits.32 Life-Course Timing The importance of predictability highlights a The majority of cash transfer field experi- drawback of conditional cash transfers, which, ments and evaluations have focused on adult by definition, are only delivered once stated or household behavior or on children’s school conditions are met: the timing of transfers attendance or physical health, but relatively little matters. Sometimes, just a few days can make research has comprehensively examined chil- the difference between being able to subsist dren’s broader cognitive, social, or emotional until the next cash transfer and being forced to development or measured child development resort to a costly loan to avoid losing housing or beyond schooling. As a result, the evidence for going hungry.25 It is important for outlays to be the benefits cash transfers convey for children’s delivered in time to buffer the effects of earn- development is newer and less definitive. The ings shortfalls, such as when a public health or promise of the approach is, however, backed financial crisis hits, when weather conditions by studies showing that increasing net house- decimate farmers’ revenues, or when condi- hold income and reducing material hardship is tions arise that could cause a family to become beneficial to children.40 And logic dictates that homeless. providing cash transfers during critical periods in children’s development—and ensuring that Program Duration the transfers are substantial, frequent, and The duration of a cash transfer program is predictable—would be particularly useful for another important consideration, because it enabling parents to guide their children through can affect whether the benefits derived from those periods. the transfers persist. Longer durations are more likely to facilitate the formation of habits, such A study called Baby’s First Years is underway in as budgeting and planning for large purchases. the United States to test the value of making cash transfers to low-income mothers starting A long duration may also enable recipients to at the time of their child’s birth and continuing become economically comfortable enough through the child’s preschool years.41 One thou- to put some money aside for harder times, sand mothers have been randomly assigned and certain long-term programs can actively across four sites to receive a relatively high

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BSP_Vol7Issue1_Interior_final.indd 78 6/15/21 10:06 PM monthly unconditional cash gift ($333) or a rela- A review of 14 evaluations of programs targeting tively low monthly unconditional cash gift ($240) families showed that cash transfers help at the time of the birth of their child and for 40 reduce violence against children,50 although months thereafter. Recruitment was completed decreases in rates of violence did not occur in all in June 2019. The researchers intend to collect studies.51,52 The decrease in stress experienced data on family life outcomes, including family by parents is one possible explanation for the stability and spending on consumption (that is, drop in violence. on immediate needs such as food, electricity, heat, gasoline, and rides on public transpor- Research focused on babies has shown that tation), and on child development outcomes, cash transfers can support infants’ health and such as brain functioning, social and emotional growth.53–55 However, the programs examined development, language skills, and learning of did not show equally strong effects, and ques- children at ages 1, 2, and 3 years. tions remain about the pathways through which cash transfers improve child health.56

Field Research Into Cash Some studies have found favorable effects of Transfers to Families cash transfer programs on young children’s Overview cognitive development.57,58 Cash transfers Overall, evidence from field studies involving also improve children’s school participation.59 cash transfer programs shows a range of posi- Conditional cash transfer programs that require tive familial outcomes relating to economic, school participation tend to result in higher social, employment, and health-related criteria attendance than unconditional programs do, as well as to improvements in children’s although the unconditional programs can also well-being and certain aspects of parenting. be beneficial. Evidence of cash transfers’ long- Although some studies were conducted in term benefits for learning is less abundant.24,59,60 Western settings, most of the evidence comes from Latin America and sub-Saharan Africa. With respect to adolescents, research has found We cannot do full justice to the broad literature that unconditional cash transfers improve examining the effects of cash transfer programs adolescents’ mental health.61–63 Other work has in this article, but we can highlight key findings revealed that cash transfers to teens and house- from particular studies that speak to their effects holds with teens can play a positive role in their on families with children. transition to adulthood. Several studies show that conditional and unconditional cash trans- In a systematic review of 201 studies on condi- fers often delay sexual activity and lower the tional and unconditional cash transfer programs, chances of early pregnancy and marriage,64–66 researchers found the programs reduced although these effects do not appear in all poverty and increased expenditures on basic studies.67 Concerns that unconditional cash needs, such as food.42 Other evidence convinc- transfers targeted to families with young chil- ingly debunks the critique that recipients lose dren or teens would increase fertility have also their incentive to work and spend the cash on not been borne out in evidence to date. Existing “temptation goods.”21,43,44 In fact, the increase in evidence, only some of which is from random- income may exceed the value of the cash trans- ized controlled trials, shows that cash transfer fers themselves if households invest the money programs have increased birth spacing among in productive (income-­generating) activities45,46 women in South Africa and delayed pregnancies such as job training, starting a business, or live- among youth in South Africa and Kenya, while stock. In addition, enhanced financial security having no effects on fertility in Zambia and can result in reduced stress, improved satis- Malawi. A recent systematic review of 21 studies faction, and better mental well-being among found that both conditional and unconditional adults.33,47–49 cash transfers reduced pregnancy among teens.44,68

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BSP_Vol7Issue1_Interior_final.indd 79 6/15/21 10:06 PM time and attention in supporting their children’s Table 1. Outcomes & key policy design components of illustrative “The long-term effects of cash education, health, and nutrition. Every three cash transfer programs targeting families with children months, participating families who comply Duration of Delivery Program Type Frequency Near-term effects Long-term effects transfer programs are mixed” with the program’s child-focused conditions— payments vehicle enrolling their children in school, ensuring their Progresa: 5 million Conditional 3 years Monthly Deposit Consumption Higher The long-term effects of cash transfer programs children attend school, and bringing the children families across all 31 on school guaranteed payments savings stability; educational states in Mexicoa attendance on accounts improved school attainment; are mixed. A review of studies of school-age to health clinics for regular health checkups, for and health verification (until 2005), attendance, increased children whose families received cash trans- example—receive US$75. Transfers are made via clinic visits; of required debit cards health, and employment recipients must behavior nourishment up to 17 years fers when the children were infants or in utero debit card to be used to purchase food items forgo receipt later among and of early adults whose families received at approved stores, and participants meet every of other participants 7–16 cash transfers when the adults were school three months in community groups to receive benefits years old at the program’s start age fairly consistently found improvements training in nutrition and health. Researchers are in school participation and grade reached in using a randomized evaluation to assess whether Opportunity NYC: Conditional 3.5 years Payments Bank Reduction in Increased 6 high poverty on schooling, made accounts, poverty and schooling among both groups.69 Findings for other outcomes, providing financial literacy and business training communities in New health, and when prepaid material hardship least economically such as health and cognitive development in to conditional cash transfer recipients can help York City; 4,800 families employment behavior stored-value disadvantaged and 11,000 children outcomes; is verified cards youth 3–4 years the younger group and income and labor force them “graduate” from the cash transfer program recipients by manual after program’s participation in the older group, were less defini- and what type of training is most effective. The remain eligible coupon start for other submission tive, possibly because of the challenges inherent goal of this research is to develop a graduation benefits (up to in measuring long-term effects. strategy to encourage recipients to improve $3,000 their financial management and develop stable annually) In a stand-alone study, which focused on sources of income.39 Family Hope Program: Nominally Indefinite Quarterly Pickup at Results not 6 years after the adolescent females, the beneficial effects of Income-poor conditional (program is payments post office available program’s start: households with on health and ongoing) increased school unconditional cash transfers on pregnancy Case Studies children or pregnant education attendance, and early marriage evaporated after five years, Next, we examine in more depth a handful of mothers, nationwide in obligations, reduction in Indonesia; millions of but verification stunting although children of unconditional cash cash transfer programs that offer insights into families of meeting the transfer recipients were taller for their age than designing programs that will maximally benefit obligations was incomplete were children whose parents did not receive families with children. We selected the programs such transfers.70 An analysis of a Mexican cash according to the following criteria: In addition to Child Grant Program Unconditional Approximately Monthly Paid by Consumption 4 years after the transfer program (which we discuss more fully in focusing on families with children, the programs (CGP) and Multiple 3 years payments ministry stability; increased program’s start: Categorical Targeting employees earnings continued stability the next section of this article) found that recip- had to have been evaluated by studies that Program (MCTP): to recipients in consumption ients made long-term progress in geographic assigned participants to intervention and control Households in in person at and expenditures impoverished rural designated on children, mobility, employment, and household income, groups randomly (to avoid biasing the results), districts in Zambia, pay points improvements with the effects on participation in the job and the results had to be available to the public with children under 5 in housing, years (CGP) or female reduction in debt 71 market especially pronounced for women. (for transparency). We also wanted the collec- or elderly heads or a tion to include examples of both conditional and disabled family member (MCTP), roughly 2,500 Exactly why the long-term effects of cash unconditional cash transfer programs, as well as (CGP) and 3,000 transfer programs are mixed requires further programs in high-income countries and in low- (MCTP) householdsb study. Presumably, however, success can be and middle-income countries, and programs GiveDirectly’s Program: Unconditional 2 years Lump Mobile After lump-sum 3 years after affected by the precise structure of the transfer sponsored both by governments and private Rural Kenya, 302 sum and phone payment, program start: and by whether recipients have opportunities to funders. See Table 1 for summary descrip- villages in Rarieda monthly increased continued payments purchase of higher levels of invest the money in assets, such as livestock, or tions of the chosen programs and their effects. durable goods asset holdings, their own human capital, such an educational Note that these case studies do not provide a consumption, Monthly payments food security, and degree, that can generate future income (see comprehensive overview of all randomized trials resulted in psychological note D). examining the impact of cash transfers, nor do food security; well-being increased parental they comprehensively cover the broad spec- psychological In the Dominican Republic, researchers are trum of cash transfer programs in developed well-being; increase in assets investigating the long-term effects of cash and developing countries. Note. Consumption = fulfillment of immediate needs, such as food, electricity, heat, gasoline, and rides on public transportation; long-term effects = outcomes transfer programs by looking at what happens reported three or more years after initial receipt of transfers. when the programs end. Solidaridad is a Conditional Cash Transfer: Progresa, in Mexico. aMexico rolled out the program in 1997; researchers evaluated samples of participants. program that provides conditional cash trans- The Progresa program, created in 1997 under bInitiatives that build on these programs are underway nationally. fers to income-poor households if they invest Mexico’s president Ernesto Zedillo, instituted

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BSP_Vol7Issue1_Interior_final.indd 80 6/15/21 10:06 PM Table 1. Outcomes & key policy design components of illustrative cash transfer programs targeting families with children Duration of Delivery Program Type Frequency Near-term effects Long-term effects payments vehicle

Progresa: 5 million Conditional 3 years Monthly Deposit Consumption Higher families across all 31 on school guaranteed payments savings stability; educational states in Mexicoa attendance on accounts improved school attainment; and health verification (until 2005), attendance, increased clinic visits; of required debit cards health, and employment recipients must behavior nourishment up to 17 years forgo receipt later among of other participants 7–16 benefits years old at the program’s start

Opportunity NYC: Conditional 3.5 years Payments Bank Reduction in Increased 6 high poverty on schooling, made accounts, poverty and schooling among communities in New health, and when prepaid material hardship least economically York City; 4,800 families employment behavior stored-value disadvantaged and 11,000 children outcomes; is verified cards youth 3–4 years recipients by manual after program’s remain eligible coupon start for other submission benefits (up to $3,000 annually)

Family Hope Program: Nominally Indefinite Quarterly Pickup at Results not 6 years after the Income-poor conditional (program is payments post office available program’s start: households with on health and ongoing) increased school children or pregnant education attendance, mothers, nationwide in obligations, reduction in Indonesia; millions of but verification stunting families of meeting the obligations was incomplete

Child Grant Program Unconditional Approximately Monthly Paid by Consumption 4 years after the (CGP) and Multiple 3 years payments ministry stability; increased program’s start: Categorical Targeting employees earnings continued stability Program (MCTP): to recipients in consumption Households in in person at and expenditures impoverished rural designated on children, districts in Zambia, pay points improvements with children under 5 in housing, years (CGP) or female reduction in debt or elderly heads or a disabled family member (MCTP), roughly 2,500 (CGP) and 3,000 (MCTP) householdsb

GiveDirectly’s Program: Unconditional 2 years Lump Mobile After lump-sum 3 years after Rural Kenya, 302 sum and phone payment, program start: villages in Rarieda monthly increased continued payments purchase of higher levels of durable goods asset holdings, consumption, Monthly payments food security, and resulted in psychological food security; well-being increased parental psychological well-being; increase in assets

Note. Consumption = fulfillment of immediate needs, such as food, electricity, heat, gasoline, and rides on public transportation; long-term effects = outcomes reported three or more years after initial receipt of transfers. aMexico rolled out the program in 1997; researchers evaluated samples of participants. bInitiatives that build on these programs are underway nationally.

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BSP_Vol7Issue1_Interior_final.indd 81 6/15/21 10:06 PM cash transfers to alleviate existing and future conditional cash transfer program in a devel- family poverty by encouraging recipients to oped country, Opportunity NYC offered cash take steps to improve their children’s nutri- incentives to families with income at or below tion, education, and health.72 Cash transfers 130% of the federal poverty level to meet were delivered to all eligible households via specific targets in education, health, employ- savings accounts (from 2002 to 2005) and ment, and employment training. Participating then debit cards (since 2009).43 By 2007, the families could earn about $3,000 a year in program’s budget had expanded to Mex$3.2 payments, depending on family size and the billion and was serving 24.06 million people (5 conditions met. Rewards for specific targets million families) in 92,672 localities across all 31 ranged from $20 to $600, and payments were Mexican states.11 Transfers, provided monthly, made once, monthly, or yearly, depending on were conditioned on school attendance (being the specified behavior. For example, families present for at least 85% of school days) and were paid $25 a month for a 95% attendance health clinic visits. Parents received subsidies rate in elementary school, $600 for students’ for school supplies and a bonus at the end of passing a high school Regents exam, $20 per the term if school attendance goals were met all month for maintaining health insurance, and year. Participants were selected on the basis of $200 per family member who had an annual demographics (families with children in targeted physical. To claim rewards for meeting other communities), and benefits were guaranteed for goals, participants manually filled out coupons three years with the possibility of renewal.11,36 and included appropriate documentation veri- Progresa required households to stop taking fying their compliance with the program’s benefits from other programs. conditions. Money was then transferred to their bank account or, if they preferred, onto prepaid Comparisons between households in the stored-value cards.76 randomly assigned experimental and control villages found that Progresa did not replace or Researchers evaluated Opportunity NYC reinforce any preexisting risk-sharing arrange- through a randomized controlled trial involving ments among households within villages or lead 4,800 families and 11,000 children.76,77 The to any statistically detectable changes in how effects on behavior, health, school participa- families coped with financial shocks. House- tion, and education were positive but limited holds who received Progresa benefits were, and modest, with the largest effects, in the however, better able to continue their usual reduction of poverty and material hardships, consumption when their non-Progresa sources occurring during the first three years.77 Relative of income fluctuated.36,73 Another evaluation to families in the control condition, those in the also found substantial increases in school atten- experimental group increased their savings and dance, lengthened educational trajectories, borrowed less money from family and friends. improved nourishment, and improved health They were also more likely to report having outcomes relative to the control group.74 Recent full-time employment but did not see improve- research that followed, for up to 17 years, chil- ments in obtaining jobs that were covered by dren who were between 7 and 16 years old in the unemployment insurance system. Improve- 1997 found that longer participation in Progresa ments in children’s schooling participation were was associated not only with greater increases limited to those who were least economically in educational attainment but also with a higher disadvantaged at the time of study enrollment. likelihood of being employed and of having a high-quality job.75 Some observers have argued that Opportunity NYC’s modest results are in part accounted for Conditional Cash Transfer: Opportunity NYC, in by inadequate planning.11 Mayor Bloomberg’s the United States. In 2007, using the Progresa program was prematurely launched, they argue, program as a model, private funders launched for political reasons (namely, to gain electoral this experimental program in six of New York credit), and it lacked a pilot phase or evaluation City’s highest poverty communities. The first of a metropolitan policy on which his program

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BSP_Vol7Issue1_Interior_final.indd 82 6/15/21 10:06 PM could be based. Others posit that the bureau- The Multiple Categorical Targeting program cratic complexity of Opportunity NYC could targeted households considered vulnerable— explain the results being weaker in New York such as those with female or elderly heads and than in Mexico.11 In addition, Opportunity NYC those with disabled family members—that also competed with several other poverty-­alleviation had children. Both programs entailed an uncon- initiatives. By contrast, Mexico’s Progresa ditional monthly cash transfer equivalent to program, implemented by the state, was partic- approximately US$12, which was paid in person ipants’ only source of economic support. by ministry employees at designated payment sites, and each program was studied via a Conditional Cash Transfer: Family Hope randomized controlled trial as well as at several Program, in Indonesia. The Indonesian govern- longitudinal follow-ups starting 24 months after ment launched the Family Hope Program in enrollment.80 These programs were not explic- 2007, providing quarterly cash transfers to itly geared toward people in poverty at the income-poor households with children or preg- household level but instead were geographically nant mothers.78 The payments, received at local targeted; 90% of the participants were below post offices, were supposed to be conditioned the national poverty line. in part on fulfillment of several health- and education-­related obligations. However, in prac- Overall, both programs were quite benefi- tice, verification that people met the conditions cial across both protective and productive was not part of the process until 2010, and even domains—that is, they improved recipients’ now, verification is not always complete before ability to pay for basic needs (that is, goods and recipients receive the money. Six years after the food) and to earn money. Both programs also program began, recipients had increased their helped to relieve children’s material depriva- use of trained health professionals and facilities tion. On the strength of the findings, Zambia for childbirth and had achieved a greater than has instituted related programs on a large scale 50% reduction in the truancy rate of children nationwide. aged 7 to 15 years. Researchers also observed a 23% reduction in stunting among participating When evaluated 24 months after inception, the children and increased enrollment in school for Child Grant Program showed significant positive teenagers. Of note, with its lack of verification, effects on consumption, food security, asset this program has functioned something like an holdings, and satisfaction of material needs, unconditional transfer program, indicating that although not on schooling or young children’s setting conditions was not critical to meeting its physical growth. The largest effect sizes were goals. found for adult subjective well-being (such as their perception of whether they were happier Unconditional Cash Transfer: The Child or less impoverished than they had been previ- Grant Program & the Multiple Categorical ously) and satisfaction of children’s material Targeting Program, in Zambia. In sub-Saharan needs. Africa, the use of cash transfers has expanded rapidly. The number of cash transfers doubled At 48 months, after cash transfers had been between 2010 and 2015, and by 2015 close received for three years, the patterns found were to 50 million people had received transfers.79 similar. Investigators also found that, in addi- Zambia launched two similar unconditional tion to being more food secure, families at 48 cash transfer programs, one in 2010 and one in months were “improving their housing condi- 2011; each provided grants for approximately tions, buying more livestock, buying necessities three years. The Child Grant Program targeted for children, reducing their debt, and investing households with children under 5 years of age in productive activities.”81 in three poor, rural districts; researchers eval- uating the program looked at households with At 24 months, the Multiple Categorical Targeting children under 3 years of age at baseline and Program showed significant effects in all the assessed the program’s effect on households. same domains that were affected at that stage

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BSP_Vol7Issue1_Interior_final.indd 83 6/15/21 10:06 PM in the Child Grant Program except for income (particularly among female heads of house- and revenue, but improvements in earnings holds) and reduced stress, depression, and were statistically significant by 36 months. cortisol levels (a biological sign of stress). A As with the Child Grant Program, the greatest follow-up study of the same program showed improvement occurred in adult subjective well- that recipients had 40% more assets than their being. A more recent study of the Multiple nonrecipient counterparts did but did not find Categorical Targeting Program found that the statistically detectable differences in indices of program increased the value that recipients health, education, and female empowerment.33 placed on future gains (that is, it reduced the discount rates in their minds) and facilitated future planning: Participants were more willing Policy Recommendations to postpone current consumption in return for Combined, our theoretical and empirical exam- future benefits.82 ination of cash transfers to families with children suggests that unconditional cash transfers are Unconditional Cash Transfer: Program Spon- generally superior to conditional transfers in sored by GiveDirectly, in Kenya. In a controlled that they improve life outcomes and economic trial that started 2011, households in rural Kenya security for families and children without adding were randomly assigned to receive uncondi- cognitive burdens on parents and without the tional cash transfers via mobile phone from stigmatization that can accompany having to the nongovernmental organization (NGO) show documentation or retrieve payments GiveDirectly.36,83 Researchers also divided through entities that make recipients feel the experimental group by whether the cash uncomfortable. What is more, the administrative grant recipients were a female or male head of costs can be low thanks to there being no need household and randomized participants into to provide an infrastructure for service delivery groups that differed in the frequency of the or for assessing whether recipients have met the transfers (lump sum versus monthly installments conditions for payment.84 We believe, however, over nine months) and the amounts received that conditional cash transfers—such as those (US$404 versus US$1,520 per year). targeting school attendance or having chil- dren immunized—can support the same goals Consistent with findings from other uncondi- if they impose little administrative burden on tional cash transfer programs, data reported the recipients and if the necessary infrastruc- in 2013 indicated spending on consumption ture is in place. The private sector, particularly was higher as a result of the transfers, with the philanthropy, can play a complementary role to monthly spending going from an original base- governments in the provision and distribution of line of US$157 to US$194 at four months after money, as the NGO GiveDirectly does. the transfers ended (a rise equal to 23% of the control group’s consumption spending at the Studies of various programs have not yet four-month mark). In addition, spending on systematically studied and pinpointed the best food, health, and education increased, while design features. The case studies we have spending on alcohol and tobacco decreased. described represent a potpourri of approaches— Monthly transfers were more likely than lump with payments ranging from a lump sum to sums to improve food security, whereas lump monthly or quarterly being delivered via direct sums were more likely to be spent on durable deposit to bank accounts, mobile phones, and goods. (See note E.) Improvements were in-person pickup at post offices. What is more, also noted in food security and investments: the choices could have been made on the basis The value of nonland assets, such as live- of feasibility in specific contexts rather than on stock, bicycles, and stoves, held by recipients the basis of which approach would be most increased by US$279 (a rise equal to 58% of the supportive of the targeted families. Our anal- control group’s mean and 39% of the average yses suggest, however, that program success transfer). The program also increased recipi- is strongly influenced by recipients’ trust in ents’ psychological well-being and self-esteem the source of distribution and the ease with

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BSP_Vol7Issue1_Interior_final.indd 84 6/15/21 10:06 PM which they can join the program and obtain the in most low- and middle-income countries, it money. is now available in the United States to Supple- mental Nutrition Assistance Program recipients The importance of a seamless, easy-to-access who have the FreshEBT app. For mobile money delivery system puts debit cards at the top of to be useful, though, an infrastructure has to our list of recommended money-provision be available to consumers (buyers of goods) vehicles. (See Figure 1.) Debit cards are readily and producers (sellers of goods) throughout a available in most middle- and high-income, community. economically stable settings and are backed by established credit companies (such as Master- We recommend that policymakers and program card) or large banks. They typically offer flexible, designers select delivery agents who are trusted no-fee ATM withdrawals and can be used in a and will not make recipients feel stigmatized. variety of online and in-person transactions. In the United States, for example, the Latino/a Large host companies provide customer service community would likely be reluctant to interact lines that can offer assistance in a wide range with an anti-immigrant community organiza- of languages for problems such as lost cards, tion charged with disbursing cash transfers.86,87 fraud, or missing PINs. Debit cards are also used Worldwide, health care providers, hospitals, widely by the general public with little stigma. In schools, other educational institutions, and the United States, cash transfers can be loaded faith-based institutions tend to be trusted in seamlessly onto existing debit cards dedicated their communities. to safety-net benefits such as food stamps. The evidence base is inconclusive on the If debit cards cannot be used, such as in low-­ amount of money that should be transferred. We income countries where the credit or banking suggest an amount that is at least 20%–25% of a infrastructure is inadequate, mobile money (that region’s poverty threshold, because this amount is, money or its equivalent received and sent would likely be meaningful both financially and via cell phone) is a good alternative.85 Although in terms of relieving stress and cognitive load. mobile money is being tested for cash transfers Imagine how useful $4,000 to $5,000 would be

Figure 1. An interdisciplinary framework for cash transfers to families with children

Theoretical foundations Policy design Considerations Recommendations Type Unconditionala Economics Delivery mechanism No-fee (seamless) debit card, or mobile app, available at (local) hospitals, schools, human Cognitive psychology Interdisciplinary service or nonprofit (psychology of poverty behavioral science agencies & behavioral economics) perspective Amount 20%–25% of the poverty threshold Frequency Often, such as monthly Duration Long term (multiple years Child development in many cases) Timing Before a crisis or immedi- ately after an unexpected crisis occurs Life-course timing At birth of child; at subsequent child development milestones

aA conditional program can be a good alternative, however, if it does not impose much of an administrative burden on the recipients and if the needed infrastructure is in place.

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BSP_Vol7Issue1_Interior_final.indd 85 6/15/21 10:06 PM as possible. The birth of a child is thus a good “To best support families’ occasion on which to provide financial support. Other key times are the preschool years (when economic stability, cash children are ready for group-based early educa- tion), the transition to primary school, and the transfers should be delivered onset of adolescence. Some research indicates that providing a lump sum during a mother’s on a predictable schedule” pregnancy can increase the likelihood of a healthy birth.88

for a family that brings in $20,000 annually. An When unconditional cash transfers are infea- alternative could be a sliding amount that lifts a sible, such as when lawmakers do not view household’s annual income to 20%–25% above income–poor people as worthy recipients of the region’s poverty threshold. such support, conditional transfers could be a viable option, but policymakers should consider To best support families’ economic stability, potential roadblocks to achieving their intended cash transfers should be delivered on a predict- aims. For instance, transfers conditioned on able schedule, and families should be clearly recipients’ having a job will be less effective informed of the amount, frequency, and timing during periods of labor market contraction than of the payments and how long they will be during expansion and when childcare is hard to eligible to receive payments. Both lump-sum come by. Further, the effectiveness of condi- and more frequent cash transfers can support tional cash transfers is likely to be dampened if families, as we have already discussed, but they are complicated by requiring certain types evidence indicates these payment methods of formal paychecks as documentation before have different effects. Large lump-sum cash cash can be delivered. In a hybrid solution, disbursements are more likely to be invested in policymakers could offer both conditional and assets (such as livestock or a business) that can unconditional cash transfers.89 This approach produce future income or be used to pay down could provide an incentive to meet the desired debt or buy big-ticket items. Smaller, more conditions while facilitating people’s ability to frequent cash disbursements may give rise to do so and would also still offer basic protec- different choices, such as whether to accumu- tion to people who are unable to comply with late savings, earmark money for a future large the conditions. Hybrid models deserve more purchase, or alleviate immediate consumption rigorous evaluation. needs. A large lump-sum cash transfer might be coupled with smaller, more frequent transfers As another recommendation, we strongly to encourage savings and investment as well support use of cash transfers, particularly as address immediate consumption needs and unconditional transfers, during humanitarian demands. emergencies. Humanitarian aid providers were increasingly turning to cash transfers in such Research into child development suggests circumstances even before the COVID-19 that cash transfers are particularly important pandemic struck, and the pandemic has mark- for supporting successful development during edly increased their use. In an influential 2015 windows when children’s progress is sensitive report, the Overseas Development Institute to environmental influences. During infancy, and the Center for Global Development argued for instance, a child’s brain development is that cash transfers in these contexts can be less highly malleable, yet this period is also when costly to deliver than other kinds of support, parents must adjust to their new role and allow beneficiaries to use the money to address family member; reallocate their energy, time, their own greatest needs, and help to sustain and money to accommodate the life-changing local markets.90 Cash transfers to people in crisis event; and also try to nurture their child as much also make sense from a behavioral perspective:

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BSP_Vol7Issue1_Interior_final.indd 86 6/15/21 10:06 PM populations experiencing an emergency are deterioration in the psychological well-being of under severe stress, which, as we discussed nonrecipient neighbors.95 Here, too, the effects earlier, adds to cognitive load and to distraction dissipated over time. that can interfere with clear-eyed decision- making and effective parenting. A recent analysis of a one-time large cash transfer to over 10,000 households across over Finally, when implementing cash transfer 600 villages in Kenya showed positive financial programs, policymakers need to be aware of the spillover to other households and businesses, very real potential for unintended consequences with little impact on prices.96 Still, the poten- for nonrecipients. So far, relatively little attention tial for unintended psychological and financial has been paid to ways that cash transfers could consequences merits further exploration. In inadvertently undermine antipoverty goals.91,92 If the meantime, policymakers need to be cogni- not provided to everyone, cash transfers could zant of potential spillover effects and would be have the unintended consequence of contrib- wise to monitor whether they occur when cash uting to local inequality and could exacerbate transfer programs are implemented. rather than improve communities’ overall well- being. In a randomized evaluation of a cash transfer program in the Philippines, for instance, Conclusion an overall 9% increase in village income led to Going forward, one open question is whether increased prices of certain foods, especially cash transfers to all families with children in areas where the program reached a high (sometimes referred to as a child allowance) proportion of people.93 Despite significantly would be a superior strategy for addressing improving nutrition-related outcomes among poverty in families with children. UNICEF and beneficiary children, the program inadver- various partners have established the Universal tently led to an 11% increase of stunting among Child Grants Initiative to explore this issue.97 nonbeneficiary children living in poorer and more remote areas, presumably because their Meanwhile, we conclude that theory and families could not afford the elevated food evidence both favor the use of cash transfers— prices. Health care utilization by nonbeneficiary particularly unconditional transfers—to help mothers and children also declined, although financially pressed families with children. These it is not known whether this decline resulted transfers support families directly through from an increase in health costs or from other increased income and indirectly by influ- reasons. encing behavior and decisions. By expanding household income, cash transfers may enable Cash transfer programs may also have negative parents to increase investments in child health effects on the mental health of nonbeneficia- and development and take advantage of other ries. For example, while a cash transfer program available support programs. And, by lowering in Malawi was operational, the program resulted the stress that accompanies scarcity, they may in significant reductions in depressive symp- enable caregivers to make better decisions for toms among beneficiary schoolgirls. (See note themselves and their children. In other words, F.) Their sisters also experienced reductions cash transfers not only support the ethical goal in depressive symptoms. In contrast, school- of an equitable society, they also increase the girls who did not live in a household receiving odds that recipient adults and their children will transfers experienced an increase in depres- thrive and thereby contribute to the economic sive symptoms. Both positive and negative development of their communities.82 effects on depressive symptoms disappeared shortly after the program ended.94 Similarly, the unconditional GiveDirectly cash transfer program described earlier in this article led to a

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BSP_Vol7Issue1_Interior_final.indd 87 6/15/21 10:06 PM end notes cash transfers when risks were relatively low. In A. For a thorough recent review of U.S. evidence on Uganda, for example, young people with existing the effects of poverty on child development, see businesses who received transfers started trades Chapters 1 to 4 in A Roadmap to Reducing Child and achieved a 40% annual rate of return after four 57 Poverty, published in 2019 by the National Acade- years. 5 mies of Sciences, Engineering and Medicine. E. The pattern of economic behavior in response to B. The Canadian cash transfer program was accom- monthly payments, as compared with lump-sum plished by eliminating a demonstration grant payments, that was seen in Kenya’s program is called the Universal Child Care Benefit, which similar to that observed among people in the went to all families with children below a set age, United States who receive the earned income tax 100 and by enhancing the targeting of recipients that credit. was occurring through the Canada Child Tax F. In the Malawi study that showed reduced depres- Benefit and its associated National Child Benefit sion in schoolgirls whose families received cash Supplement. transfers, the amount of the transfers and whether C. For reviews of research into universal basic they were unconditional or conditional apparently income, see the 2020 report What We Know mattered. When the transfer amounts were low, About Universal Basic Income: A Cross-Synthesis the reductions in depression were similar across of Reviews by Rebecca Hasdell98 and the 2019 recipient families’ girls regardless of whether working paper Universal Basic Income in the US conditions were set. Yet when the transfer and Advanced Countries by Hilary W. Hoynes and amounts were high, the reductions in symptoms Jesse Rothstein.38 were smaller in the conditional design, potentially because the girls felt a responsibility for helping to D. Long-term effects of cash transfers can depend earn the greater sum and experienced the respon- on the precise structure of the transfer. Uncondi- sibility as a burden. tional one-time asset transfer programs provide beneficiaries with money to buy a productive asset, such as livestock. The effects of a one-time author affiliation asset transfer program could differ from those of a longer lasting cash transfer program, particu- Gennetian: Duke Sanford School of Public larly when limited access to savings devices might Policy. Shafir: Princeton University. Aber: New prevent households from accumulating sufficient York University. de Hoop: UNICEF Office of funds to purchase the productive asset. Transfers Research-Innocenti. Corresponding author’s of US$120 to microenterprises in Ghana increased e-mail: [email protected]. some measures of profit for men but none for women at the first year of follow-up, and US$200 transfers to youth in Liberia temporarily increased author note earnings.99 One possible reason for the lack of sustained impact might be that recipients do not The findings, interpretations, and conclusions have access to good investment opportunities. expressed in this article are those of the authors Another possibility is that beneficiaries are reluc- and do not necessarily reflect the policies or tant to take the risks associated with investments. views of their affiliated institutions. Some studies showed success in the form of large long-term increases in income after one-time

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