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Poverty reduction v well-being: a cash transfer experiment from Malawi

June 29, 2011
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What difference does it make to development interventions if you worry about well-being rather than income poverty? A rather neat example has just come through from some new research by Sarah Bair, Jacobus de Hoop and Berk Özler for the World Bank Poverty and malawi girls schoolsInequality team. They looked at the impact on girls’ mental health of cash transfers in Malawi (why do so many researchers work on Malawi? They must be reaching plague proportions – a researcher poll tax would probably solve the country’s problems overnight).

The researchers used a randomized control trial (no surprise there, then) involving nearly 4000 girls to compare the psychological impact of unconditional cash transfers with making them conditional on school attendance and uncovered some striking differences.

“The provision of monthly cash transfers had a strong beneficial impact on the mental health of school-age girls during the two-year intervention. Among baseline schoolgirls who were offered unconditional cash transfers, the likelihood of suffering from psychological distress was 38 percent lower than the control group, while the same figure was 17 percent if the cash transfers offers were made conditional on regular school attendance.”

malawi girls 2The researchers concluded that the main psychological benefit stemmed from improved family income, rather than school attendance, and that making them conditional on school attendance put sufficient stress on the girls to undo a lot of the benefits. ‘When an important source of income for the family depends on the actions of the adolescent girl, it might place a heavy burden on her and to cause adverse effects on her mental health’ eroding over half the psychological benefits of the cash transfer.

Conclusion?

‘Overall, the results presented in this paper indicate that mental health among adolescent girls can substantially improve when they experience positive income shocks. However, if these income shocks are administered as part of a cash transfer intervention such as the one examined here, these mental health benefits can also be quickly eroded if sufficiently large payments are made to the parents conditional on the actions of their adolescent daughters.’

So if you focus on income poverty, conditional cash transfers offer you a double bonus – direct poverty alleviation, and greater school attendance leading to lower poverty in future generations. But if you focus on wellbeing, the equation becomes more complex. Interesting.

5 comments

  1. Fascinating research, cheers for the link Duncan.

    But I’m not sure I follow your implication that there is some complexity as conditional cash transfers are uniquely associated with greater school attendance.

    Perhaps I misunderstand your implication here or have misread the paper, but the authors do not seem to provide compare school attendance of UCT vs CCT. In this paper the authors only seem to track well-being.

    The authors (Sarah Baird and Ben Ozler) did monitor school attendance (of the same Zomba programme) in an earlier paper (‘The Short-Term Impacts of a Schooling Conditional Cash Transfer Program on the Sexual Behavior of Young Women’), which you previously blogged on. However, as noted in the comments to your blog and also by Wahenga, that research did not find a difference between in school attendance between UCT and CCT recipients.

    So I’m not sure there’s a trade-off here. Seems more like win-win, with UCTs, but I may be confused.

    Thank you for the link.

    Alice

    Duncan: I suspect that the confusion is mine, Alice! Presumably, if conditions don’t improve school attendance and they reduce the wellbeing benefits of the intervention, then the case for making cash transfers conditional is doubly weakened, right?

  2. V interesting. Presumably one would need to look at the school attendance of recipients of unconditional transfers, relative to the baseline and to those receiving conditional transfers to assess extent of trade-off – positive income shocks might well also increase school attendance. (according to the notes its in Baird et al 2010, but I only have so much time for blog-based distraction.)

    I thought this brief observation from the study is also worth highlighting re: being careful with the ethics of RCT style development interventions:

    “We also find evidence that the
    intervention had detrimental spillover effects on eligible non-beneficiaries in treatment village”

  3. Dear Alice and Duncan,

    Thanks for your comments and the post. To see that a CCT vs. a UCT poses a significant trade-off, please see the following link of our paper (forthcoming in the Quarterly Journal of Economics, 126:4, 2011): http://ipl.econ.duke.edu/bread/papers/0511conf/Baird.pdf. CCTs convincingly outperformed UCTs in schooling (enrollment, attendance, and achievement tests) and the effect of UCTs on school enrollment is actually barely detectable, with no effects on attendance or learning. So, conditions for regular attendance DO improve schooling outcomes. However, there are other outcomes, for which UCTs perform better than CCTs, such as teen marriage and pregnancy, and, in this case, mental wellbeing.

    TB,

    Blog-based distractions are fun and useful:-) If you get a chance, please take a look at the paper linked above. And, the detrimental spillovers on girls living in intervention areas who did not receive cash transfers point not only to effects of experiments like this, but also to possibly any program that is targeted within villages: people just below the cut-off in a poverty targeted program could equally experience these reductions in welfare, although more research is needed.

  4. Duncan and Alice,

    Thanks for the post and the comments. To see the rather significant trade-off between a CCT and a UCT, please see our paper here (forthcoming in the Quarterly Journal of Economics, 126:4, 2011): http://ipl.econ.duke.edu/bread/papers/0511conf/Baird.pdf.

    CCTs substantially outperformed UCTs in improving schooling outcomes (enrollment, attendance, and achievement) and were much more cost-effective. In fact, the UCTs barely improved enrollment and led to no detectable improvement in attendance or learning. However, there are other important outcomes, such as teen marriage and pregnancy, and, in this case, mental health, for which UCTs performed better than CCTs.

    TB,

    Blog-based distractions are fun and useful :-) When you get a chance, please check out the paper linked above. On the issue of the detrimental spillovers on girls who lived in intervention areas but did not receive cash transfers, our findings point to the possible such effects of not only experiments, but also any assistance program targeted within villages. A poverty targeted program could have the same detrimental effects on wellbeing among people just above the cutoff point for targeting. This is an issue we’ll highlight a bit more in future drafts of the paper.

    Thanks,

    Berk.

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