Cash Transfer Programs in the Developing World

Posted in Projects

Helping the world’s poorest get the most out of their supplementary income

Governments around the developing world use cash transfer programs—many of which are conditional on beneficiary behavior, such as sending children to school—as a major instrument of social protection, economic stimulus and service delivery. A large body of academic evidence shows that such programs can improve the welfare of poor populations in a variety of ways, e.g. by increasing the consumption of the poor, facilitating greater investment in health and education, and reducing gender disparities. Yet until recently, little attention has been paid to the behavioral implications of such programs, specifically whether they can be improved through the addition of insights from behavioral science that shed light on the drivers of beneficiaries’ decisions and actions.

This is now changing, with recent and ongoing influential research exploring the impact of many factors beyond simply the size of the transfer on the lives of the poor. Such research has examined, for example, the timing, frequency, and method by which the funds are disbursed, and whether the costly need to enforce conditionality can be replaced with something cheaper that might be just as effective (a “label” for instance). ideas42 seeks to add to this growing body of evidence in the developing world by designing and evaluating a series of behavioral science “nudge” interventions to improve the impact of cash transfer programs. Behavioral insights may also improve the effectiveness of beneficiary trainings, social service delivery, awareness campaigns, or other programming that accompanies the transfer.

Examples of ideas42 projects in the domain of cash transfers include (note: some of these may still be in development):

  • Madagascar: Improving household nutrition and educational outcomes in the context of an unconditional transfer
  • Mexico: Encouraging formal savings uptake in the context of a conditional transfer
  • Sudan: Spurring rural and urban productivity and take-up of ancillary social services in the context of an unconditional transfer