Giving no-strings-attached money to the world's poorest produces remarkably good results


#1

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#2

It's what I've been saying since forever - give money to desperate people in need, and they'll do useful stuff with it. It's hard to be a philandering beer-swiller in a village that can't feed itself.

It's only when there's some kind of corrupt structure thwarting life-improvement that supervision is needed.


#3

I too have been saying this forever, about U.S. reparations for slavery, and for subsequent, successive structural modes of communal impoverishment. Give cash grants directly to black members of blighted urban communities.


#4

Even in not terribly poor circumstances, like with the banking failure, the money should have been handed out to the people, instead of the banks. Although I'm not intending to minimize the plight there. Just agreeing that middlemen tend to screw things up.


#5

This doesn't fit with my preferred cultural narratives. Therefore, I'm going to go off about how giving "those people" money with no strings attached will increase crime and make life worse because drugs.


#6

Or expensive cell phones, you left that out.


#7

Don't forget Cadillacs. And shopping carts full of lobsters and steak, purchased while wearing a mink coat.


#8

Conditional aid, unconditional aid, and micro-loans all seem to have their own unique benefits, and seem like they can work better together than apart.

I'd love to see a dollar for dollar comparison of results.


#9

NPR Planet Money blog and This American Life have dedicated a few episodes to this topic in the recent past. Worth a listen:

http://www.thisamericanlife.org/radio-archives/episode/503/i-was-just-trying-to-help?act=1#play


#10

The other interesting thing that Give Directly does that goes against the grain of most charities is they actually measure their results using objective cost/benefit analysis instead of subjective "feel good" anecdotes.

This approach has been criticized for being impersonal and heartless but their response has basically been: "How do you know if it works if you don't measure it?"


#11

"Know if it works? Why, shucks, we only care whether it feels like it works!" wink


#12

"dollar for dollar comparison"

As a blank statement, I doubt that'd tell you much, except maybe something interesting about previously unrecognised selection biases. Doing comparisons to try and figure out where - and why! - each type of aid excels or fails would be useful though.


#13

There does seem to be one condition: giving samples for measuring cortisol levels. That's got to be pretty confusing for some of the recipients. "You want what?"


#15

This comparative aspect is what most typical charities shy away from as it creates a perception that the recipients are being used as unwitting experimental subjects. This can have negative consequences on both donations and beneficiaries.

Imagine if a story broke that the Red Cross only partially distributed some collected donations to a disaster-stricken community in order to do a comparison study of monetary vs. non-monetary aid. Their credibility would be destroyed.


#16

Most charities are very serious about making quantifiable objectives and then measuring their successes based on this, at least when it comes to getting money from government grants, foundations, and corporations, because those institutions want clearly laid out objectives and reports on progress.


#17

Yeah true. I'd like to know how to give aid as a package of conditional and unconditional aid... to get the most out of it.


#18

But.. But if we do that, there's no direct benefit to domestic manufacturing, transportation or farming interests, and it gives no political leverage over the recipients at all.

It's as if they don't even know what an aid budget's for!


#19

No doubt that charities have all kinds of objectives that they measure themselves against but the NPR article pointed out that most traditional charities are reluctant to do side-by-side scientific comparisons against other charity organizations in order to determine which one is more effective. This is where some of the criticism of Give Directly's methods comes into play.

Doing direct comparisons of different charities could create PR problems that the charities in question are doing social experiments on needy people instead of fulfilling their charters. In order to accurately compare methodologies, it usually requires some kind of control group. This can lead to all kinds of unintended consequences - like fostering resentment among the villagers between those who receive cash and those who do not.


#20

Sure, but it isn't necessary to withhold aid in order to do a comparative study. "All" that's required is that agencies maintain useful records, and conduct post-event cost/benefit studies on what was done, then interrogate the data - "for Event Y, which had conditions A, B, and C, we used approaches a, b, and the results were Z. For Event X, which had conditions ..." etc. Then matricize that whole bad boy, and sift out common themes using Ragin's Qualitative Comparative Analysis.

Dr Chris Paul (RAND) used that to figure out which counter-insurgency approaches work, and which don't. The same methodology would, I think, work in figuring out what aid approaches work.

But, as you mention in another post, many agencies shy away from even modest attention to book keeping, which would make such a study somewhat tricky.


#22

It seems giving no-strings-attached money to the world's richest produces remarkably devastating results.

This morning I made a mind-blowing calculation based on the Bank of England's estimate that the bank fraud culminating in the Great Recession would cost the world as much as $200 trillion in damage to the global economy. I'd read this a few days ago, and then this morning learned the global population was about 5 billion, so I worked out the cost on a per person basis. I can barely believe it, but it seems that instead of crashing the global economy in an orgy of corruption, we could have given each person in the world $40,000 and be in no worse shape than we are now. Amazing! Arguably we'd be in much better shape, as we wouldn't have the problem of accelerating inequality, for one thing. And power would be more democratically distributed, for another. As a result, we'd stand a chance of solving all the other inter-related crises of energy, climate, education, work, economics, politics, terrorism, etc.

THE $100 BILLION QUESTION - Andy Haldane
http://www.bankofengland.co.uk/publications/Documents/speeches/2010/speech433.pdf

The issue came up regarding the $3 billion JPMorgan fine. More here:
www.democracynow.org/2013/10/28/while_defenders_cry_foul_jpmorgan_chases