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The Short-term Impact of Unconditional Cash Transfers to the Poor: ExperimentalEvidence from Kenya

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  • Johannes Haushofer
  • Jeremy Shapiro

Abstract

We use a randomized controlled trial to study the response of poor households in rural Kenya to unconditional cash transfers from the NGO GiveDirectly. The transfers differ from other programs in that they are explicitly unconditional, large, and concentrated in time. We randomized at both the village and household levels; furthermore, within the treatment group, we randomized recipient gender (wife versus husband), transfer timing (lump-sum transfer versus monthly installments), and transfer magnitude (US$404 PPP versus US$1,525 PPP). We find a strong consumption response to transfers, with an increase in household monthly consumption from $158 PPP to $193 PPP nine months after the transfer began. Transfer recipients experience large increases in psychological well-being. We find no overall effect on levels of the stress hormone cortisol, although there are differences across some subgroups. Monthly transfers are more likely than lump-sum transfers to improve food security, whereas lump-sum transfers are more likely to be spent on durables, suggesting that households face savings and credit constraints. Together, these results suggest that unconditional cash transfers have significant impacts on economic outcomes and psychological well-being.

Suggested Citation

  • Johannes Haushofer & Jeremy Shapiro, 2016. "The Short-term Impact of Unconditional Cash Transfers to the Poor: ExperimentalEvidence from Kenya," The Quarterly Journal of Economics, Oxford University Press, vol. 131(4), pages 1973-2042.
  • Handle: RePEc:oup:qjecon:v:131:y:2016:i:4:p:1973-2042.
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    File URL: http://hdl.handle.net/10.1093/qje/qjw025
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    Cited by:

    1. Christopher Blattman & Julian C. Jamison & Margaret Sheridan, 2017. "Reducing Crime and Violence: Experimental Evidence from Cognitive Behavioral Therapy in Liberia," American Economic Review, American Economic Association, vol. 107(4), pages 1165-1206, April.
    2. Shweta Saini & Sameedh Sharma & Ashok Gulati & Siraj Hussain & Joachim von Braun, 2017. "Indian Food and Welfare Schemes: Scope for Digitization Towards Cash Transfers," Working Papers id:12033, eSocialSciences.
    3. Balakrishnan, Uttara & Haushofer, Johannes & Jakiela, Pamela, 2016. "How Soon Is Now? Evidence of Present Bias from Convex Time Budget Experiments," IZA Discussion Papers 9653, Institute for the Study of Labor (IZA).
    4. Hjelm, Lisa & Handa, Sudhanshu & de Hoop, Jacobus & Palermo, Tia, 2017. "Poverty and perceived stress: Evidence from two unconditional cash transfer programs in Zambia," Social Science & Medicine, Elsevier, vol. 177(C), pages 110-117.
    5. Aregawi G. Gebremariam & Elisabetta Lodigiani & Giacomo Pasini, 2017. "The impact of Ethiopian Productive Safety-net Program on children’s educational aspirations," Working Papers 2017:26, Department of Economics, University of Venice "Ca' Foscari".
    6. Pierre Bachas & Paul Gertler & Sean Higgins & Enrique Seira, 2017. "How Debit Cards Enable the Poor to Save More," NBER Working Papers 23252, National Bureau of Economic Research, Inc.
    7. Islam, Nizamul & Colombino, Ugo, 2017. "The Case for NIT+FT in Europe: An Empirical Optimal Taxation Exercise," IZA Discussion Papers 11147, Institute for the Study of Labor (IZA).
    8. Margherita Calderone, 2017. "Are there different spillover effects from cash transfers to men and women? Impacts on investments in education in post-war Uganda," WIDER Working Paper Series 093, World Institute for Development Economic Research (UNU-WIDER).
    9. James Andreoni, 2017. "The Benefits and Costs of Donor-Advised Funds," NBER Chapters,in: Tax Policy and the Economy, Volume 32, pages 1-44 National Bureau of Economic Research, Inc.
    10. Bernhardt, Arielle & Field, Erica & Pande, Rohini & Rigol, Natalia, 2017. "Household Matters: Revisiting the Returns to Capital among Female Micro-entrepreneurs," CEPR Discussion Papers 11981, C.E.P.R. Discussion Papers.
    11. Charlotte Ringdal & Hoem Sjursen, 2017. "Household bargaining and spending on children: Experimental evidence from Tanzania," WIDER Working Paper Series 128, World Institute for Development Economic Research (UNU-WIDER).
    12. repec:spr:ssefpa:v:10:y:2018:i:2:d:10.1007_s12571-018-0766-7 is not listed on IDEAS
    13. Beegle, Kathleen & Galasso, Emanuela & Goldberg, Jessica, 2017. "Direct and indirect effects of Malawi's public works program on food security," Journal of Development Economics, Elsevier, vol. 128(C), pages 1-23.
    14. Ambler, Kate & de Brauw, Alan & Godlonton, Susan, 2017. "Cash transfers and management advice for agriculture: Evidence from Senegal:," IFPRI discussion papers 1659, International Food Policy Research Institute (IFPRI).
    15. repec:eee:wdevel:v:99:y:2017:i:c:p:498-517 is not listed on IDEAS
    16. repec:eee:wdevel:v:105:y:2018:i:c:p:1-12 is not listed on IDEAS
    17. Jonathan de Quidt & Johannes Haushofer, 2016. "Depression for Economists," NBER Working Papers 22973, National Bureau of Economic Research, Inc.
    18. repec:eee:pubeco:v:156:y:2017:i:c:p:150-169 is not listed on IDEAS
    19. Lusk, Jayson L. & Weaver, Amanda, 2017. "An experiment on cash and in-kind transfers with application to food assistance programs," Food Policy, Elsevier, vol. 68(C), pages 186-192.
    20. Arielle Bernhardt & Erica Field & Rohini Pande & Natalia Rigol, 2017. "Household Matters: Revisiting the Returns to Capital among Female Micro-entrepreneurs," NBER Working Papers 23358, National Bureau of Economic Research, Inc.
    21. Golan, Jennifer & Sicular, Terry & Umapathi, Nithin, 2017. "Unconditional Cash Transfers in China: Who Benefits from the Rural Minimum Living Standard Guarantee (Dibao) Program?," World Development, Elsevier, vol. 93(C), pages 316-336.
    22. Casaburi, Lorenzo & Reed, Tristan, 2017. "Competition in Agricultural Markets: An Experimental Approach," CEPR Discussion Papers 11985, C.E.P.R. Discussion Papers.
    23. Hoel, Jessica B. & Hidrobo, Melissa & Bernard, Tanguy & Ashour, Maha, 2017. "Productive inefficiency in dairy farming and cooperation between spouses: Evidence from Senegal:," IFPRI discussion papers 1698, International Food Policy Research Institute (IFPRI).
    24. Bellani, Luna & Bia, Michela, 2017. "The Long-Run Impact of Childhood Poverty and the Mediating Role of Education," IZA Discussion Papers 10677, Institute for the Study of Labor (IZA).
    25. Casaburi, Lorenzo & Macchiavello, Rocco, 2018. "Firm and Market Response to Saving Constraints: Evidence from the Kenyan Dairy Industry," CAGE Online Working Paper Series 367, Competitive Advantage in the Global Economy (CAGE).

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