NAIROBI — GiveDirectly has been experimenting with what happens when you give extremely poor people a guaranteed income for up to 12 years. Working within rural Kenya, the GiveDirectly experiment is based on a randomized control trial comparing four groups of villages. This experiment relies on two things, giving money directly to poor people, and documenting how they use their new income. Traditional conditional cash transfers are those in which the government, or charity,
Traditional conditional cash transfers are those in which the government or a charity transfers money to persons who meet certain criteria. GiveDirectly operates differently; it takes donated money and directly gives it to poor citizens. GiveDirectly is essentially doing unconditional cash transfers. This difference of approach allows citizens to have autonomy over their own money, and life.
GiveDirectly chairman Michael Faye says the payment is $22 per person per month, which is “the food poverty line — the amount of money it would take to afford a basic basket of food for yourself.” The average recipient in Kenya lives on just 65 cents (nominal) per day. It takes recipients in Kenya an average of 32 minutes to collect their transfers from the closest agent.
GiveDirectly’s experiment still has many years to run, but past data on unconditional cash transfers show promising results. In a 2016 Quarterly Journal of Economics article, transfer recipients were shown to “experience large increases in psychological wellbeing.” The large increase in psychological wellbeing can already be seen in the GiveDirectly experiment run in Kenya.
NPR spoke to a married couple enrolled in GiveDirectly’s experiment and reported the following; “the silence over money seeped into the rest of their relationship, But now, figuring out how to spend the charity windfall has become a hopeful, joint project. And it’s got them doing other fun stuff together.”
The journal article also elaborates on how the money is used; “Monthly transfers are more likely than lump-sum transfers to improve food security, whereas lump-sum transfers are more likely to be spent on durables.” GiveDirectly is also interested in the difference between transfers, and in its four-group study has designated some villages as lump-sum recipients and others as long or short-term recipients.
The journal ends with an emphasis on debunking the myth of unconditional cash transfers: “In particular, we observe increases in food expenditures and food security, but not spending on temptation goods.” Unconditional cash transfers may at first seem like a risky and unregulated way to help those in poverty, but GiveDirectly is hoping to show that giving recipients the choice on how to spend the money results in money well spent.
– Yosef Flowers