Unconditional Cash Transfers and Rage Against the Machine

There has been a lot of talk about unconditional cash transfers (UCTs) lately. An awful lot in the wake of the release of Haushofer and Shapiro’s findings on GiveDirectly in a policy brief (pdf) earlier this month.

In short, Haushofer and Shapiro find that GiveDirectly’s cash transfers (i) allow poor households to build assets, (ii) increase consumption, (iii) reduce hunger, (iv) do not increase spending on alcohol and tobacco, (v) increase investment in and revenue from livestock and small businesses, and (vi) increase the psychological well-being of recipients and their families.

These are all good things, and I look forward to the replication studies that will tell us when and under what conditions UCTs work.

(Matt Collin has a very nice post on UCTs here, in which he adds the caveat that just giving cash will not solve the coordination failures leading to the underprovision of public goods in many developing countries. Likewise, David McKenzie goes into detail about the strengths and weaknesses of Haushofer and Shapiro’s study in a post on the World Bank’s Development Impact blog.)

Every Silver Lining Has a Cloud

Is there a flip side to the success of and subsequent media frenzy surrounding UCTs? Funny you should ask. Last Sunday, a former student posted the following on Facebook:

“we are tired of donation with conditionalities” … an African friend of mine expressing frustration with me, after I questioned the use of US taxpayer dollars to finance her NGO’s weekend retreat to a $500+/night luxury resort…

So there you have it: The Haushofer and Shapiro findings might have just enabled a Rage-Against-the-Machine culture among aid money recipients.

What am I talking about? If you’ve never listened to the (not safe for work!) lyrics of the song in this video:

I invite you to do so now. The song’s claim to fame — what made it a paean to rebellion and teenage angst — is the fact that singer Zack de la Rocha repeatedly screams “F**k you I won’t do what you tell me!” after the guitar solo ends.

So without replication studies to tell us when and under what conditions unconditional cash transfers actually work, we might just have created a magic card that allows every aid recipient to tell donors “Don’t tell me what I can’t do!” And without such studies, UCTs run the risk of being to the 2010s what microfinance was to the 2000s–an expensive (and not always effective) fad.