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Ideology or evidence? What does research tell us about common perceptions of cash transfers?

06 Jun 2017
Dakar TP workshop 2017

(6 June 2017) A new UNICEF Innocenti Working Paper, Mythbusting? Confronting Six Common Perceptions about Unconditional Cash Transfers in Africa, summarizes evidence on six common assumptions about cash transfer programmes in Africa. The paper uses data from eight in-depth evaluations conducted on large government-run unconditional cash transfer projects in sub-Saharan Africa, under the Transfer Project.

The arguments supporting unconditional cash transfer programming for poor households in developing countries are numerous. Evidence shows cash transfers are effective in reducing poverty and also have widespread social and economic benefits – often larger than traditional forms of development assistance. An increasing body of evidence also shows that cash transfers may provide protection during humanitarian crises, as reflected in the high-level commitments at the World Humanitarian Summit, and the Grand Bargain.

Despite their widening application, and growing robust evaluation-evidence base, some skeptical policymakers cite anecdotal evidence that cash is wasted or mis-used. Others claim that beneficiaries use cash to purchase alcohol or tobacco, or that cash transfers create dependency or make beneficiaries lazy. Doubts have also been expressed regarding the cost of financing such programmes, along with fears that beneficiary households will decide to increase fertility in an effort to qualify for benefits (particularly in child-grant models).

According to the Transfer Project: “These narratives influence public perception of cash transfers and can play an important role in the political and social acceptability of financing, piloting and scaling up such programmes. What does the evidence say about these and other perceptions and claims around cash transfers? Are these anecdotes actually representative of systematic behaviour by programme recipients within large-scale, representative surveys?”

Making use of data drawn from eight rigorous evaluations on large-scale government unconditional cash transfer in sub-Saharan Africa, conducted by the Transfer Project, the new working paper summarizes evidence on six common perceptions about cash transfer programmes targeted to poor and vulnerable households. Namely that cash transfers:  

  1. Induce higher spending on alcohol or tobacco;
  2. Are fully consumed (rather than invested); 
  3. Create dependency (reduce participation in productive work);
  4. Increase fertility;
  5. Lead to negative community-level economic impacts (including price distortion and inflation); and
  6. Are fiscally unsustainable.

“We present evidence refuting each of these claims. We complement our evidence with summaries of other review papers and prominent literature, which has examined these questions, both in sub-Saharan Africa, and globally. We conclude that these perceptions are myths, and that they present a distorted picture of the potential benefits of these programmes,” say the authors of the new UNICEF Innocenti ‘Mythbusting’ working paper. 

Since such mis-perceptions often affect policy debates, they can unjustifiably limit the range of policy options low- and middle-income country governments have at their disposal to accelerate poverty reduction. The paper concludes by suggesting areas for future research on topics that are insufficiently studied, and calls for stakeholders to keep in mind the growing evidence base when informing programming and resource allocation, instead of relying on dated studies with little applicability to current programming, as well as on anecdotes, opinion or speculation. Efforts are required by all actors to ensure that ideology does not outweigh evidence.