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Can Mistargeting Destroy Social Capital and Stimulate Crime? Evidence from a Cash Transfer Program in Indonesia

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  • Lisa Cameron
  • Manisha Shah

Abstract

Cash transfer programs can provide important financial support for poor households in developing countries and are becoming increasingly common. However the potential for mistargeting of program funds is high. This article focuses on the social consequences arising from misallocation of resources in close-knit communities. We find that the mistargeting of a cash transfer program in Indonesia had significant negative social consequences. The prevalence of crime within communities increased and participation in community groups declined. Hence poorly administered transfer programs have a potentially large negative downside that extends beyond the pure financial costs that have been the focus of the literature to date.

Suggested Citation

  • Lisa Cameron & Manisha Shah, 2014. "Can Mistargeting Destroy Social Capital and Stimulate Crime? Evidence from a Cash Transfer Program in Indonesia," Economic Development and Cultural Change, University of Chicago Press, vol. 62(2), pages 381-415.
  • Handle: RePEc:ucp:ecdecc:doi:10.1086/674102
    DOI: 10.1086/674102
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    References listed on IDEAS

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    1. David Coady & Margaret Grosh & John Hoddinott, 2004. "Targeting of Transfers in Developing Countries : Review of Lessons and Experience," World Bank Publications, The World Bank, number 14902.
    2. World Bank, 2006. "Making the New Indonesia Work for the Poor," World Bank Other Operational Studies 8172, The World Bank.
    3. Eckel, Catherine C & Grossman, Philip J, 1998. "Are Women Less Selfish Than Men? Evidence from Dictator Experiments," Economic Journal, Royal Economic Society, vol. 108(448), pages 726-735, May.
    4. Elbers, Chris & Fujii, Tomoki & Lanjouw, Peter & Ozler, Berk & Yin, Wesley, 2007. "Poverty alleviation through geographic targeting: How much does disaggregation help?," Journal of Development Economics, Elsevier, vol. 83(1), pages 198-213, May.
    5. Mary Kay Gugerty & Michael Kremer, 2000. "Outside Funding of Community Organizations: Benefiting or Displacing the Poor?," NBER Working Papers 7896, National Bureau of Economic Research, Inc.
    6. Hastuti & Sudarno Sumarto & Nina Toyamah & Syaikhu Usman & Bambang Sulaksono & Sri Budiyati & Wenefrida Dwi Widyanti & Meuthia Rosfadhila & Hariyanti Sadaly & Sufiet Erlita & R. Justin Sodo & Sami Baz, 2006. "A Rapid Appraisal of The Implementation of the 2005 Direct Cash Transfer Program in Indonesia : A Case Study in Five Kabupaten/Kota," Development Economics Working Papers 22529, East Asian Bureau of Economic Research.
    7. Demombynes, Gabriel & Ozler, Berk, 2005. "Crime and local inequality in South Africa," Journal of Development Economics, Elsevier, vol. 76(2), pages 265-292, April.
    8. John Gibson & Bonggeun Kim, 2006. "Measurement Error and the Effect of Inequality on Experienced versus Reported Crime," Working Papers in Economics 06/05, University of Waikato.
    9. Muliadi Widjaja, 2013. "An Economic and Social Review on Indonesia’s Direct Cash Transfer Program to Poor Families in 2005," Working Papers in Economics and Business 201304, Faculty of Economics and Business, University of Indonesia, revised Apr 2013.
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    Citations

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    Cited by:

    1. Alberto Alesina & Caterina Gennaioli & Stefania Lovo, 2019. "Public Goods and Ethnic Diversity: Evidence from Deforestation in Indonesia," Economica, London School of Economics and Political Science, vol. 86(341), pages 32-66, January.
    2. Tohari, Achmad & Parsons, Christopher & Rammohan, Anu, 2017. "Targeting Poverty under Complementarities: Evidence from Indonesia's Unified Targeting System," IZA Discussion Papers 10968, Institute of Labor Economics (IZA).
    3. Stoeffler, Quentin & Mills, Bradford & del Ninno, Carlo, 2016. "Reaching the Poor: Cash Transfer Program Targeting in Cameroon," World Development, Elsevier, vol. 83(C), pages 244-263.
    4. Cobb-Clark, Deborah A. & Kettlewell, Nathan & Schurer, Stefanie & Silburn, Sven, 2018. "The Effect of Quarantining Welfare on School Attendance in Indigenous Communities," IZA Discussion Papers 11514, Institute of Labor Economics (IZA).
    5. Bazzi, Samuel & Sumarto, Sudarno & Suryahadi, Asep, 2013. "It's All in the Timing:Household Expenditure and Labor Supply Responses to Unconditional Cash Transfers," MPRA Paper 57892, University Library of Munich, Germany, revised 31 Nov 2013.
    6. Tohari, Achmad & Parsons, Christopher & Rammohan, Anu, 2017. "Does Information Empower the Poor? Evidence from Indonesia's Social Security Card," IZA Discussion Papers 11137, Institute of Labor Economics (IZA).
    7. Zeballos, Eliana, 2018. "Destructive actions and productivity: Experimental evidence on interpersonal comparisons among dairy farmers in Bolivia," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 76(C), pages 82-94.
    8. Attanasio, Orazio & Polania-Reyes, Sandra & Pellerano, Luca, 2015. "Building social capital: Conditional cash transfers and cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 22-39.
    9. Tohari, Achmad & Parsons, Christopher & Rammohan, Anu, 2019. "Targeting poverty under complementarities: Evidence from Indonesia's unified targeting system," Journal of Development Economics, Elsevier, vol. 140(C), pages 127-144.

    More about this item

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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