Do cash transfer programmes foster dependency?

At the FAO’s blog, Ben Davis argues that they don’t.  Some key quotes, drawing on recent research on several African projects:

Along with the increase in productive activities, the cash transfers programmes have given households more flexibility with their time. In most countries of sub-Saharan Africa, low paying casual agricultural wage labour is an activity of last resort, when households are desperate for cash.  In Zambia, women in beneficiary households reduced their participation in agricultural wage labour by 17-percentage points and 12 fewer days a year. Both men and women increased the time they spent on family agricultural and non-agricultural businesses. … As one elderly beneficiary said, “I used to be a slave to ganyu (low-paid wage labour) but now I am free.”

Cash transfer programmes also have allowed beneficiary households to better manage risk. Fieldwork in Kenya, Ghana, Lesotho, Zimbabwe, Ethiopia and Malawi has found that the programmes increased social capital and allowed beneficiaries to ’re-enter’ existing social networks and/or to strengthen informal social protection systems and risk-sharing arrangements.

One of the important points that I take from this is that the idea of “welfare dependency” as transfer-induced withdrawal from the labor market is overly simplistic.  Selecting a livelihood strategy rarely comes down to a binary decision to work or depend on the state, be it in rural sub-countries in Kenya or poor neighborhoods in Chicago.  Instead, people  choose from a portfolio of livelihood options, often combining various sources of income at the same time.  These might include agricultural production, self-employment, waged labor, salaried labor, support from family or friends, and support from the government.  Davis’ point suggests that state-provided transfers don’t substitute for all the other livelihood choices here, but rather give people enough of a buffer that they don’t have to resort to the most poorly paid or abusive options quite so often.

Do politicians substitute cash transfers for other public goods?

The results from Twaweza’s latest Sauti za Wananchi poll in Tanzania are out, and they include some interesting questions about public support for cash transfers.  There’s a good write-up at the CGD blog.  In short, people were less supportive of cash transfers than one might have expected – and the more they learned about the transfers, the more likely they were to say that they would prefer the government to spend money on other public goods.  This is all the more surprising given that the transfers provided through the Tanzania Social Action Fund have been found to have a wide range of positive social impacts.

I came across similar types of skepticism when I was speaking with people in Ghana about the LEAP program this summer.  These were informal conversations with friends and casual acquaintances, so obviously not representative of Ghanaian public opinion generally, but they still had an interesting range of variation.  A number of people voiced the standard objection that cash transfers would make recipients lazy and entitled.  When I pointed out that research in other low income countries has shown that this isn’t generally the case, they often suggested that Ghana might be the exception.  (Regardless of one’s priors on this matter, though, I’m fairly sure that receiving US$10 – 20 a month isn’t encouraging many people to drop out of the labor market.)

One reaction that I hadn’t expected was what I’ve come to think of as the public goods critique, similar to the Twaweza results.  Several people agreed that cash transfers might be useful, but suggested that this could lead to lower investment in other types of public goods.  Tony Hall at LSE has argued this explicitly in the case of Brazil.  The underlying concern here seemed to be that the current donor enthusiasm for cash transfers would give governments a way of ducking their responsibilities to provide public goods – giving poor citizens small amounts of money before sending them off to fend for themselves.  It’s certainly true that cash transfers are administratively much simpler than maintaining functioning public education or healthcare systems.  A promising area for future research, I think.

The persistence of extreme poverty in the US

Vox had a thought-provoking article last week on people in the US who live on less than $2 per person per day.  It’s adapted from the book of the same title by Kathryn Edin & Luke Schaefer.  They find that millions of Americans (including up to three million children) have months where they live on next to nothing, frequently going hungry and facing homelessness as a result.  The entire article is essential reading.  Here are some of the main points:

  • There’s no clear demographic pattern among people who face extreme poverty.  As Edin says, “It’s racially and ethnically diverse, it’s regionally diverse. You see both married and unmarried couples in this situation.”  However, poverty tends to be worse in rural areas and in the South, where fewer services are available.
  • People want to work, but find it difficult to hold down jobs.  Edin notes that “almost all of these households actually do have workers… You still see these pretty lengthy spells in extreme poverty, but these people are in and out of the low-wage labor market. Seventy percent of them have had a worker in the low-wage labor market in the past year.”  Schaefer adds that “it’s very hard to find a job. The unemployment rate has been very high for low-educated workers for a long time. These folks are at the back of the line.”
  • Social services and family support networks rarely help.  Many eligible households either don’t apply for TANF, or (in some cases) have been told mistakenly that they’re not eligible.  Only a million people in the entire country receive TANF at present, although 15% of the population or 45 million people live below the poverty line.  In addition, few people seem to receive much assistance from their families.
  • People come up with creative ways to access even small amounts of money if they can’t work.  Selling plasma is one of the most common, followed by cashing out food stamps (which cuts the value of the stamps by about half), collecting scrap metal for redemption, and doing sex work.  Selling sex can be a way to access housing or food as well as cash.
  • And my own takeaway: While the availability of formal employment is different, overall this is quite similar to what extreme poverty looks like in countries around the world.  People find various ways of making claims on others in order to access food, shelter, and clothing, or the cash to buy the same.

Perhaps what’s most striking in this context is that, while we do have a wide range of social safety nets, none of them are designed to address this type of poverty. Nor has half a century of prolonged economic growth done much to reduce it.  I came away from this article thinking that it’s one of the strongest claims I’ve yet seen for the value of a universal basic income grant.

Going the last mile in ending extreme poverty

Brookings had an excellent blog series last month on going the last mile to end extreme poverty.  The posts were adapted from a book of the same name which was just released.  I was most struck by Raj Desai’s article on the role that welfare programs played in ending extreme poverty in today’s high income countries.  As he pointed out, when the US, UK, and Germany adopted major welfare programs in the late 1800s and early 1900s, they had the same GDP per capita (in real terms) as India, Indonesia and China do today.  Welfare subsequently played a major role in eliminating extreme poverty in these countries.  So why haven’t today’s middle income countries done the same?

His answer is worth quoting at length.

The earliest social protection programs in Western Europe were of the contributory variety—financed out of taxes on wages—as a way of preventing social conflict. Otto von Bismarck’s pension, sickness insurance, and worker compensation programs were, after all, created to pre-empt a Social Democratic victory in Germany. These systems, combined with the political changes taking place in the continent, would lead to dramatic expansions in social protection in later decades. Even as industrialization initially caused poverty, it also created rising wages for workers. Eventually, organized working classes formed a strong alliance with the fast-growing, urban middle class. This political coalition sought policies that would protect itself from economic cycles—especially after the economic turmoil of the 1920s and 1930s—that would eventually result in the postwar welfare system. Indeed, the durability of these welfare programs may be attributed to the participation of the middle class, which shaped program design: welfare programs provided universal coverage so that the middle class itself was not excluded from benefits.

Many of today’s developing countries have followed a very different path. Labor tends to be less organized and have weaker relative bargaining strength. Much of the labor force remains in the informal sector and is left out of any contributory schemes, which tend to have limited scope. Social protection is more reliant on a fragmented system consisting of a large number of non-contributory programs financed out of general revenues. More importantly, the preferences of both governments and donors are mainly for programs that target particular sub-populations to achieve cost efficiency.

Consequently, an opposite political dynamic appears to be playing out in developing countries. Instead of middle class “buy-in” resulting in broader and more comprehensive programs, targeted and fragmented programs are inhibiting median-voter support for social protection and leading to middle-class exit. The consequences are familiar to designers of targeted social protection—their vulnerability to shifts in political winds, their susceptibility to abuse or capture by elites, and their occasional failure to outlive the aid programs that may finance them. The overall result is that the demand for comprehensive welfare programs in middle-income countries remains weak.

One of the best succinct descriptions of the political economy of social protection that I’ve yet come across, and an interesting consideration thinking about novel social protection delivery mechanisms like GiveDirectly’s potential partnerships with regional governments in Kenya.

An ethnography of economics

Sorting through the articles I’m reading for my comparative politics exam, I rediscovered an old favorite – Mike McGovern’s 2011 review of Paul Collier’s The Bottom Billion and War, Guns and Votes. It’s a wide-ranging critique of quantitative studies of civil war which is quite broadly applicable beyond these two books.  I agree with a number of his points, but wanted to highlight here one that’s not made often enough: that the sharply drawn divide between quantitative and qualitative methods collapses when looked at more closely.

As McGovern puts it,

What is striking to me as an anthropologist, however, is that much of the fundamental intellectual work in Collier’s analyses is, in fact, ethnographic. Because it is not done very self-consciously and takes place within a larger econometric rhetoric in which such forms of knowledge are dismissed as ‘subjective’ …  it is often ethnography of a low quality. (p. 346)

He goes on to read both books in this light, looking for the places where Collier imputes his respondents’ motivations or understandings of the world in order to interpret his quantitative results.

At one point, while summarizing Jeremy Weinstein’s work on rebel group recruitment in Mozambique and Sierra Leone, he lapses into an imaginary account of would-be rebels’ states of mind:

‘Others will be attracted by the prospects of power and riches, however unlikely; if the reality of daily existence is otherwise awful, the chances of success do not have to be very high to be alluring. Even a small chance of the good life as a successful rebel becomes worth taking, despite the high risk of death, because the prospect of death is not so much worse than the prospect of life in poverty.’ (BB: 29)

How do we know these things to be true? They must either come from conversations with the fighters themselves, a type of source that is usually excluded from Collier’s account … or from the author’s own imagination. There are many aspects left unexplored, and no justification given for privileging one explanation over another. [Based on McGovern’s own work, he knows that in] Liberia, Sierra Leone, and Côte d’Ivoire, some young men joined ‘prophylactically,’ trying to protect their home communities from attack. Others joined one militia group to avenge the deaths of loved ones at the hands of that group’s enemies. Others, including some women, joined by their own accounts partly for the fun and adventure of being fighters. (p. 349)

After the de rigeur swipe at taxi cab anthropology, he concludes with a very strong call to restore the role of ethnography in policy-making:

Ethnographic nuance is neither a luxury nor the result of a kind of methodological altruism to be extended by the soft-hearted. It is, in purely positivist terms, the epistemological due diligence work required before one can talk meaningfully about other people’s intentions, motivations, or desires. The risk in foregoing it is not simply that one might miss some of the local color of individual ‘cases.’ It is one of misrecognition. Analysis based on such misrecognition may mistake symptoms for causes, or two formally similar situations as being comparable despite their different etiologies. To extend the medical metaphor one step further, misdiagnosis is unfortunate, but a flawed prescription based on such a misrecognition can be deadly. Policy interventions are already risky in the best circumstances. (p. 353)

If you need me I’ll be memorizing this quote in its entirety for the obligatory large-N vs small-N question on my upcoming exam.

(Update: Ed Carr also makes a good point about how establishing causality is not the same thing as understanding causal mechanisms.  Qualitative research is well-suited to the latter task.)

The resurgence of small-scale manufacturing in Ghana

My dad recently sent me an excellent Roads and Kingdoms article by Yepoka Yeebo on Suame Magazine, an industrial park near Kumasi where 200,000 workers manufacture everything from nails to trucks.

Suame Magazine emerged around a colonial-era armory in central Kumasi in the 1930s. For a while, it was just big companies—local giants and multinationals repairing cars. They grew rapidly and were moved to the outskirts of Kumasi in the 1960s. Then in the 1970s, with Ghana’s economy faltering, and a bunch of new trade restrictions almost banning imports, the big companies collapsed, leaving hundreds of skilled workers. They became the first wave of small firms in Suame Magazine.

They slowly turned this into the best place in the region to overhaul a fleet of trucks or get heavy machinery made. People come from as far away as Burkina Faso and Nigeria to do business here, and there’s a sprinkling of foreigners from further afield wandering around: Chinese traders clutching spare parts, and Indian businessmen haggling with mechanics. There are 12,000 businesses here now.

Joyce Darko sells nuts, bolts and washers in Suame Magazine

There must be similar places elsewhere in Africa – where would one look to find them?

Informed consent vs control of information

I was really struck by Lua Wilkinson’s recent post on the ethics of photography in low income countries.  She included a fascinating anecdote about Dorothea Lange’s famous photo of a California sharecropper and her children, which later turned into one of the iconic images of the Great Depression:

According to reports, [Florence] Thompson and her family were not happy that they had unknowingly become the poster children for poverty. They voiced concern that the information surrounding the photo wasn’t even accurate… Thompson gave permission for the photo to be taken but was under the impression that the photos would never be published publicly, and even Lange herself notes that she failed to send the final prints to the family as promised.

The point is this: Lange asked Thompson if her photo could be taken and Thompson said yes. The problem was not lack of permission. The problem was that Lange had control over that photograph, and there was little communication about what that actually meant. Lange controlled where the photo ended up, as well as how Thompson and her family were portrayed.

The Thompson family was turned into a symbol of poverty. Lange, widely respected for her work in social justice, likely saw the family as such and knew the power that symbol would have on policy-makers and humanitarian aid. But in doing so, by turning the Thompson family into a symbol, she also took away their power. She controlled their identities. They had just one story, and that story was of poverty, whether they (as the story’s central characters) agreed or not.

There are some obvious similarities here with the process of gaining informed consent in survey research in low income countries.  Every researcher I know is scrupulous about getting consent before beginning an interview, but I don’t think most respondents really know what will happen to the data they provide after the interview is finished.  The consent form never mentions that information about their household and others like it will be discussed by academics and policymakers at high-flown conferences around the world in a few years.  Call it partially informed consent – lots of information provided about the circumstances of the interview, but very little about who controls the data and how they interpret it afterwards.

Should Lange not have published that photo?  Its publication did help spur an increase in food aid to depressed areas of California, and it’s a truly striking piece of art as well.  But it remains the case that Thompson’s consent was only partial – to have the photo taken, but not to have it published.  Lange ought to have asked for her permission before releasing it.

And what of informed consent, then?  Admittedly the parallels are not exact.  Thompson and her family were easily identifiable and upset precisely because they could be identified in a way that they didn’t want, while IRB requirements mean that survey data is kept rigorously anonymous, and that respondents are promised that they won’t face any other problems as a result of participating in the study.  The fact that there’s a power imbalance between the respondents (who provide the information) and the researchers (who control its use) doesn’t inherently mean that the interaction is unethical.  Indeed, there’s a strong ethical case for research that aims to reduce poverty.  But it’s still important to think critically about the power dynamics present in this work, and particularly the question of whose voices get heard in development.  What might respondents say differently if they knew that their information wasn’t just of interest to the researcher, but might be presented on a global stage?