A major study in western Kenya has found that unconditional cash transfers to low-income families led to significant improvements in health, including almost a 50% drop in infant mortality. Economist Professor Edward Miguel of the University of California, Berkeley, explains the results of the large-scale trial conducted with the NGO GiveDirectly.
BBC World Service – Weekend Programme
Interview Transcript: Direct Cash Transfers in Kenya
Host: Paul Henley
Guests: Professor Edward Miguel (University of California, Berkeley), Dr. Julie Norman (University College London), Ntombi Zodwa-Nyoni (Playwright and Screenwriter)
Paul Henley (Host):
You’re listening to Weekend on the BBC World Service. My name is Paul Henley, and for the rest of the programme with me here in the studio are Ntombi Zodwa-Nyoni, who is a playwright and film scriptwriter here in the UK, and Julie Norman, Associate Professor of Politics and International Relations at University College London.
It’s specialist subject time, and Julie, at this point, we often ask our guests questions to highlight recent news stories or topics that have caught their attention but that might have been missed by a lot of listeners. And you’ve drawn our attention to the results of a recent study in Kenya that looked at what happened when thousands of low-income families in a rural part of western Kenya were given a direct cash payment by the authorities to spend completely as they wished. It was to see if this sort of support, in the form of basic income, would have clear material outcomes.
Why were you interested, Julie?
Dr. Julie Norman:
In addition to my work on the Middle East, I’ve worked on different humanitarian and conflict research projects in Central Africa. A lot of the programmes I did were with NGOs, and one of the main ideas that’s emerged over the past five years has been to shift the NGO model — away from running projects — towards direct cash transfers.
It’s really become more possible now because technology allows these transfers directly to individuals, even via mobile phones. We’ve already seen economic benefits in the past, but this particular study looked at the health benefits, which I found fascinating.
Paul Henley:
Well, for more on this study, we spoke to Edward Miguel, a Professor of Economics at the University of California, Berkeley, in the United States, and co-author of the published findings. How would he describe the aims first?
Professor Edward Miguel:
The idea of handing out cash has been around in government programmes for a while, but very often there are conditions attached. What was new with the NGO GiveDirectly, starting a bit over a decade ago, was the idea of handing out cash unconditionally to poor households and doing so efficiently.
They transfer money to people via mobile money, so there’s very little staff needed. The underlying idea is that poor households have many needs — so let’s give them the resources and let them choose what’s most important to them.
Paul Henley:
How did you measure the impact? You must have had control families without the money.
Edward Miguel:
That’s right. In development economics, it’s become common to work with NGOs and governments on randomized control trials in settings like this, where there are many poor households and limited resources.
In this case, we randomized which areas and villages would receive the large cash transfers and which would serve as control villages. That allows us to understand the impacts of cash — by comparing those who received assistance with those who did not.
Paul Henley:
Were people good at deciding exactly what to spend the money on?
Edward Miguel:
People spent the money on the kinds of things you would expect — food, clothing, and school fees. One of the things we found in our most recent work is that when there’s a pregnant woman in the household, families also spend a lot on healthcare related to her pregnancy.
In treatment households — those who received the large cash grants — pregnant women were almost 50% more likely to deliver their babies in hospitals. And as a result of the improved nutrition and better access to healthcare, infant and child mortality fell dramatically — by about 45 to 48 percent.
Paul Henley:
You don’t get much more of a concrete result than that, do you?
Edward Miguel:
It was really stunning for us to find this result. We did the analysis many different ways, and it’s a very strong outcome based on a large sample.
We collected data on the birth histories of women across nearly the entire county of Siaia, covering around 100,000 births. That’s what makes the statistical results so robust.
Paul Henley:
And it shows how even the poorest parents prioritise their children.
Edward Miguel:
Exactly. Poor households pay for better healthcare and deliver in hospitals. There’s another interesting finding: women in the third trimester of pregnancy actually work considerably less if they’re in the treatment group that received cash.
In control households, even in late pregnancy, women often have to work long hours on farms or in small businesses. But with the cash transfers, they could work fewer hours at a critical time when work strain and stress could complicate a pregnancy.
Paul Henley:
What you’ve just described sounds like a glowing endorsement of cash transfers to the poor — but governments and NGOs are still cautious about the idea, aren’t they?
Edward Miguel:
In many cases, yes, although the idea is spreading. More government programmes are now providing cash transfers.
There was recently a programme in South Africa that was scaled up to millions of households, inspired by findings like these — showing that unconditional cash transfers can truly improve lives.
We’ve also found that these transfers benefit the broader economy: poor households spend locally, in shops and on food, so there’s a positive spillover effect for local businesses as well.
Paul Henley:
Edward Miguel, Professor of Economics at the University of California, Berkeley.
