The Case for Unconditional Handouts to the Poor

Monday, August 19, 2013

Morocco is one of the more developed countries in Africa, but only about half — 56 percent — of its population can read. Most schools there lack electricity, and many don’t even have toilets. Most children living in the country’s rural areas start primary school, but about 40 percent drop out before sixth grade. The rudimentary education system makes its mark in the country’s test scores: It’s ranked 59 out of 69 countries in math and 64 out of 70 on science.

To nudge families to keep their children in school, researchers recently experimented with giving parents in the country’s poorest districts small grants of between $8 and $10 per child each month. Some of them were told they’d only get paid if their child attended school regularly, but the others were simply handed money, told nothing, and sent on their way.

Surprisingly, the researchers found that giving out money without any preconditions was more effective than asking families to do something in exchange for their bounty.

“To the extent that conditionality had any impact, it was a negative one,” they concluded.

A New York Times magazine story this week explores a similar theme: The rising trend of giving the poor cash transfers — free money — and hoping that it results in some positive action, like eating better or going to school or getting medical treatment.

And despite our most pessimistic views of human nature, the Times found that in some cases, it actually works.

Source: The Atlantic (link opens in a new window)