Cash transfers

Abhijit Banerjee and Esther Duflo's book, Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, is making waves in development circles. Beyond the strong focus on randomised control trials, the book distinguishes itself by wading into issues on which the development community has often ignored or made uninformed guesses. These include the rationale behind the decisions made by the poor, whether they make the "best" decisions available, and how policymakers should respond.

The Centre for Social Protection´s conference ‘Social Protection for Social Justice’,  came, in the words of the Institute for Development Studies’ Stephen Devereux, a full 11 and ¾ years after the term ‘social protection’ was first coined. Since then, social protection has risen steadily up the development agenda, and emerging economies such as Mexico, Brazil, and South Africa have rolled out extensive schemes which transfer cash directly to the poor. This conference challenged delegates to think more critically about the role and limits of such schemes in promoting social justice and challenging structural inequalities.

Programmes which transfer money directly to the poor help them adapt to climate change. That´s what I´m suggesting in a new briefing paper to be presented at the upcoming conference on ‘Social Protection for Social Justice’, will be held at the Centre for Social Protection in Brighton between the 13th and 15th of April. 

A previous blogpost on Due South discussed the potential for cash transfers to contribute to climate change adaptation. But 'just giving money to the poor' is not the only social policy programmes being implemented in the developing world. In India, a different approach is being tried: rather than guarantee the poor an income, the government guarantees them paid work, via the National Rural Employment Guarantee Act (NREGA), which came into being in 2005.

Almost unnoticed by the world, Iran has moved towards the adoption of a basic income grant to distribute money from its oil industry directly to its citizens. This could be a good example of how distorting fossil fuel subsidies used in many developing countries could be repealed without adversely impacting upon the poor. Furthermore, the outcomes of this policy could have a wider impact on the way rents from natural resources are used - allowing households to choose how to spend profits from resource extraction.

A new book argues that the best approach to reducing poverty is the simplest: giving money to the poor. In Just Give Money to the Poor, Hanlon, Barrientos and Hulme argue that cash transfers put money directly in the hands of those that need it, and that the poor are both willing and capable of using the money to benefit themselves and their families. Given the uncertainties and pitfalls of spending money on climate change adaptation, could we do worse than simply giving money to the poor themselves?