Conditional Cash transfers help with more than cash

Cash transfer programs are having a lot of success to help those in poverty. Most of the programs give a bit of cash to the poor in exchange for taking steps to improve health and education. The programs started in Latin America but are spreading through the rest of the world, so much so that the World Bank is beginning to invest in them.

From Newsweek, writer Christopher Werth gives us some examples of how cash transfer programs help in areas other than the pocketbook.

One of the biggest impacts of these programs: education. Since its launch more than a decade ago, South Africa’s Child Support Grant has cut the number of children out of school in half. South Africans are free to use their payment any way they wish, but some countries require school enrollment to keep the money coming in. “It changes the dynamics of the way people conceptualize welfare,” says John Hoddinott, a senior research fellow at the International Food Policy Research Institute. “Both parties have rights and responsibilities.” In many cases, however, simply having cash in hand allows parents to keep their children in the classroom. “Poor households … need the labor of their children; that’s why they don’t send them to school,” says Santiago Levy, the architect of Mexico’s cash-transfer program, now called Oportunidades. But what works in one country doesn’t always work in another. In Malawi, one of the least-developed countries in the world, the World Bank compared two different groups of school-age girls: one was given cash only if they went to school; the other was simply given the money. The results showed little difference in attendance. In fact, those without conditions fared better when it came to reducing teen pregnancy and teen marriage, factors that often pull Malawian girls out of the classroom.

Putting cash in the pockets of the poor also directly improves their health and well-being. Brazil’s Bolsa Familia, which is now the world’s largest cash-transfer program, has cut child malnutrition by 45 percent. Mexico’s Oportunidades is credited with adding more meat, fruit, and vegetables to the largely grain-based diet of the country’s poor. In South Africa, a study by MIT’s Esther Duflo found that cash transfers can reduce the kind of stunted growth in young children that results from inadequate nutrition. Girls benefited most, making up nearly half the gap in height when compared with American girls of the same age. And Duflo found that the program was most effective when the money went to women, who are more inclined than men to invest in the welfare of their kids.