A constant concern I seem to hear about charitable giving is about what poor people will do with economic assistance once they receive it.
Won’t poor people just waste the money or benefits? Won’t they use it to buy unworthy items like cigarettes, alcohol, or drugs? A second line of criticism has more to do with self-sufficiency. Won’t receiving economic assistance just make people dependent? Won’t it show people that they don’t really need to have a job, or to strive to be self-sufficient?
An organization called GiveDirectly (and others like it) have challenged these assumptions recently by giving what are called “unconditional cash transfers” to individuals living in poverty. Basically, they locate impoverished people and communities overseas in need of assistance, and then they give individuals large amounts of money with no strings attached; the recipient can use the money however they want, for whatever reason they see fit.
This approach has received lots of criticism, for all the listed reasons above. Surely the recipients, not having to answer to anyone about their spending choices, will squander the money in all sorts of different ways! However, in October, researchers at the Poverty Action Lab at MIT published their findings on the effects and outcomes of unconditional cash transfers. Surprisingly, their findings suggest that very little of the money was wasted. Instead, recipients used the money for such purposes as to buy more food for their families, to invest in the education of themselves and their children, and to build up revenues around small business or agricultural products. Conversely, the study could “ﬁnd no evidence of increased expenditure on temptation goods such as alcohol, tobacco and gambling.”
Perhaps we should give the poor more credit; they might know how to best improve their own lives, if we would just give them a little help and a little trust.
(PS: as an extra, here and here are clips from a recent Daily Show segment for a humorous take on the narrative surrounding waste and fraud in food stamp assistance, highlighting some of the concerns around economic assistance I mentioned in the first paragraph.)
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