(money) – (control) = (failure)?

Glynn Marshes writes:

On the NPR website, a story on the charity GiveDirectly

that’s trying to help poor people in the developing world in an unusual way: by sending them money with no strings attached.

Skeptics thought “the poor” would blow the free cash on gambling and alcohol and cigs. Turns out they didn’t.

“Instead we see them investing in their kids’ education, we see them investing in health care. They buy more and better food.”

But there’s a problem.

Even though households were spending more on health and education, it didn’t seem to be having much effect. People who got money were sick just as often as those who got less. And school attendance rates for their kids didn’t really change . . .

IOW, they spent their free money “wisely,” but the outcomes weren’t what their benefactors would have liked.

Caveat. In another study in Uganda,

the government gave people money and people’s incomes went up — and stayed up, even years later. People had used the money to start small businesses, like metal working or tailoring clothes.

And one of the GiveDirectly founders asserts (giddily?) that having more money reduces stress, and when you’re less stressed, you’re better able to cope with organizing your life to improve your circumstances. Sounds reasonable to me . . . only — what if a bit of gambling, alcohol, and cigs helps you relax? Heh.

Other question: if no-strings-attached cash doesn’t improve “outcomes,” doesn’t it follow that — if your goal is to improve peoples’ lives — you need to force them to consume services designed to drive your desired outcomes?

Force kids into school. Force people to consume healthcare services. Force people to save their money.

Result: utopia.


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2 Responses to (money) – (control) = (failure)?

  1. Handle says:

    The real trick of parenting is not forcing them to eat their vegetable, brush their teeth, do their homework, practice at piano and sports skills, etc. but to condition them to want to do these things on their own. Sometimes it’s easier than others.

    Paternalists know what they want poor people to want to do with a little extra money. But I think you’ve got to admit it’s a bit of a leap to just assume they actually do want it and will do it. GiveDirectly’s RCT’s will teach us some interesting things. But it’s important to remember that there is not just one kind of poverty.

    My father taught me that, in his experience, he had known two kinds of poor people. There were deserving poor, good people who had just fallen on hard times through bad luck; people who did everything right, with a strong work ethic, who were thrifty, family-focused, not too prideful to did ditches and say ‘yes sir’ if it meant putting food on the table, and would immediately return to normal, decent living the minute opportunity presented itself. And then there were undeserving poor, who would never be able to conform their behaviors to the patterns that are marketable enough to deliver them from destitution.

    The only things you need to cure deserving poverty is a little money and opportunity. No amount of money will cure the spirit of undeserving poor. And too much easy money for deserving poor will turn them into the undeserving poor.

    My father also once said that the only anti-poverty program that every worked in American was work.


  2. Janon says:

    So what does society do if/when automation technologies eliminate the ability of large proportions of the population to do meaningful work?


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