Chris Blattman on Cash, Poverty, and Development


Russ Roberts over at EconTalk interviews Chris Blattman:

Russ: So, you have been writing a series of articles and done quite a bit of research, and I hope we get into much of that. Arguing that giving people cash rather than more complicated forms of development or welfare might be the right way to go for helping people who are desperately poor. What's the basic argument?

Guest: Well, the basic argument is not necessarily that cash is more effective than other forms of assistance, but that it's effective relative to its cost. It isn't always; but it can be very, very, very inexpensive to deliver. So if you have any kind of utilitarian view of the world and you want to help as many people as possible, then you pay attention to that. And so the question is: What is it good at? And there's a two-part answer. One is, like anywhere, people can use cash to buy the things they need. Maybe that's just shelter and food. And that can be here or that can be in the poorest country. But I think especially in a poorer country where a lot people have potential to be self-employed. Mainly because there aren't firms, so there aren't jobs, they are held back from self-employment because they don't have capital. And one of the cheapest ways to get them capital, to help [?] by a lot of things; but capital is really important. And cash can be one of the effective ways to put capital into their hands. But then the question is: When the poorest get cash, especially what people might think of as the more vulnerable or the more risky, high-risk young men for example, what kinds of decisions do they make with cash? We weren't surprised they didn't have access to it. But I think the big question has been: Do they invest it or do they spend it on “good things”?

More here.