In 2013 Daniel Handel, an economist with USAID—the U.S. government’s main agency for foreign assistance—had just moved to Rwanda when he heard about a charity that was testing a bold idea:
Instead of giving people in poor countries, say, livestock or job training to help improve their standard of living, why not just give them cash and let them decide how best to spend it?
Handel had been mulling this exact question. Aid programs were spending enormous sums per person to boost poor people’s income less than the cost of the program. At this rate, Handel thought, why not just hand over the money to people directly? This program called GiveDirectly was doing just that.
So Handel went to his bosses at USAID’s Rwanda office and proposed an experiment:
Take one of USAID’s typical programs and test it against cash aid. For the comparison, he selected a program to improve child and maternal health in Rwanda by teaching families about nutrition and hygiene.
A pool of families from nearly 250 villages was selected based on typical criteria and randomly assigned to one of four groups.
- Those in the first were the “control” and received no help.
- Those in the second group were visited by the nutrition and hygiene education teams.
- Families in the third group were given small cash grants by GiveDirectly equivalent to the per-person cost of the nutrition and hygiene program, an average of $114.
- In the final group, families got a much larger cash grant of around $500 – a figure chosen because this was the amount that GiveDirectly estimated was more likely to make an impact.
Following the experiment, the government released the results of the first study in the series.
The experiment found that the program met none of its main objectives. Teaching Rwandans about nutrition did not improve their nutrition or health. Neither did giving Rwandans the cash equivalent of the cost of the education program — about $114.
“Our hearts sank.”
The program’s focus on trying to change behaviors is one of the world’s major strategies for ending malnutrition. And, at least in this example, it had failed to achieve any of its primary goals.
A year on, the children who had been targeted by the nutrition and hygiene program were no more likely to eat a better or more diverse diet, and no less likely to be malnourished or anemic than children who had gotten no help at all. But providing a much larger cash grant of about $500 did make some difference.
Supporters of such “cash-benchmarking” exercises are heralding this particular one as a milestone. For years, anti-poverty advocates and researchers have complained that the U.S. government doesn’t do enough to make sure its aid programs actually work. “But when you talk about giving money to people straight up, with no conditions, people at USAID look at you kind of like you’re a crazy person. There’s ‘an inherent sense’ that they can’t be trusted to spend it wisely.” said Daniel Handel’s associate James Carbonell.
- In this case, people who were given the cost-equivalent grants used much of the money to pay down their debts.
- It remains unclear what, if any, material changes USAID is planning to its nutrition efforts based on the study’s findings.
- At the time of this writing (FEB 2019), USAID remains reluctant to discuss the experiment and did not grant the authors of the NPR story permission to speak directly to Daniel Handel about the results.
Discussion
- Did the authors of the study Fail?
- Would proving that cash-equivalent grants were as beneficial as the education program have qualified as Success?
- Or did the authors succeed by proving that simply handing recipients money without any stipulation was the wrong way to achieve a particular goal?
- Could the authors conclude that poor people really DON’T know “what to do with the money”?
Credits
Heavily edited from an original story by NPR.
Copyright 2018 NPR. To see more, visit http://www.npr.org/.
Link to the original:
https://whyy.org/npr_story_post/which-foreign-aid-programs-work-the-u-s-runs-a-test-but-wont-talk-about-it/
Further Reading
The Planet Money story: https://www.npr.org/templates/transcript/transcript.php?storyId=214210692
From Nonprofit Chronicles: https://nonprofitchronicles.com/2018/09/11/why-is-the-us-giving-cash-to-poor-people-in-africa-no-strings-attached-for-good-reason/
Brief Exercise
- In the Reply field below, briefly answer any or all of the Discussion Questions, then discuss how you would respond to finding that your “My Hypothesis” proposal cannot be supported by the initial evidence.
- (Assume in your Reply that you did not wait until the last week of the semester that the evidence did not support your Hypothesis. 🙂
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Counterintuitive Spring 2023 
1. The authors of the study did not fail. The program itself failed rather than the hypothesis itself.
4. I think that the authors cannot conclude that poor people “don’t know what to do with money.” If given $500, it’d be shown that they’d use it to get it for something useful. It doesn’t mean they necessarily will use it for food or clothing, but they cannot prove if they cannot spend money.
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1) The authors of the study didn’t fail. They had learned many things which is a positive.
2) They didn’t find what they would have liked to but they did make some discoveries pertaining to the argument.
3) They did it the wrong way because they didn’t take into account how they lived or how they learned. They tried to educate them using ways that may not help how they learn.
4) No. The large grant of money was the one that showed change. They know what to do with the money and how to help their families but they just didn’t have the money to help their families.
If the evidence found for my hypothesis doesn’t work then I would need to either change my hypothesis to fit the evidence or find evidence to back the hypothesis
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Did the authors of the study Fail?
No, the authors of the study did not fail. They merely came to a conclusion that they were not expecting.
Would proving that cash-equivalent grants were as beneficial as the education program have qualified as Success? Or did the authors succeed by proving that simply handing recipients money without any stipulation was the wrong way to achieve a particular goal?
I would say that proving the cash-equivalent grants were more beneficial than the education program merely because the children needed to be clothed and fed. If they already had education, then it would have been a different story.
Could the authors conclude that poor people really DON’T know “what to do with the money”?
No, the authors should not conclude that poor people really don’t know “what to do with the money.” Poor people will spend money on the things that they need in the moment, such as food and clothing.
I would respond to find that my hypothesis proposal cannot be supported by the initial evidence by diving deeper into my research and encouraging evidence to prove my hypothesis wrong. {?}
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1. The authors didn’t fail this study, they might of not got the results they wanted however they did prove something. The children got slightly better nutrition when given $500 cash directly for them to use.
2. No because it prove that providing money for education was ineffective compare to providing $500 cash to the family directly.
4. I think it’s more of that poor people don’t have enough or resources to provide for their households and needs.
If I found out that my hypothesis is not supported by my evidence than I would alter it and look at it in a different perspective or I would change it. Though I wouldn’t count this as a fail but more of I prove that my initial hypothesis doesn’t work.
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1. No, the authors of the study did not fail. I think they tested a hypothesis that did not execute a desired goal, but they did learn from it. They found their answer, but not necessarily the one they anticipated.
2. Yes, because even though the cash-equivalent grants seemed to be more beneficial than the useless education program, if they were both a success, than at least each of the groups would have earned some sort of reward in their own way.
3. No, not exactly, because handing Rwandans the $500 was used for the good of their families and it did make “some difference” within their lives.
4. No, because these Rwandans utilized the money given to them to make an impact within their own family dynamic. Actually, these “poor people” did know what to do with their money since it was utilized for the good.
If my hypothesis proposal could not be supported by the initial evidence I would first check all of my data and make certain it was accurate. I would also conduct more research on the topic to see if I can find anything else that could support my initial claim. If not, I would change my hypothesis so that I could eventually find evidence to support my claim.
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