Poor Relief: Why Giving People Money Is Not the Answer to Global Poverty

Direct cash payments to the poor have been widely lauded as a potential solution for global poverty, but this concise debut study makes a strong case that they don’t work. Economist Henderson draws on myriad examples, among them a five-year-old program in India that enabled the needy to buy a kilogram of rice for one rupee; in 2018, it was replaced with a program that deposited cash to recipients’ bank accounts. While many applauded greater autonomy for the beneficiaries, the beneficiaries themselves were not happy. Among other problems, the timing of when payments would be deposited was confusing, and the added step of having to withdraw cash led to fewer people benefiting—the elderly and disabled were disproportionately not using the program. Henderson also debunks a study purporting to show that monthly cash payments to low-income mothers positively impacted the brains of their infants, and points to how a direct cash program in Chad led to those not selected for the payments “refus[ing] to pay back” money borrowed from program recipients, who were “seen as wealthy.” Henderson doesn’t claim that direct payments are never the answer; he notes that direct assistance is vital following a natural disaster. But for routine giving, Henderson advocates for “radical decentralization”: local decision-making about how resources should be allocated. It’s a cogent critique of a trendy philanthropic tool. (Nov.)