This blog first appeared on the Wahenga website, under the pseudonym of Sissy Teese
Is there a conspiracy afoot? Practitioners of social protection have long debated the relative merits of conditional and unconditional cash transfers. Now the World Bank appears to have introduced a third category. We label these conspirational cash transfers: cash transfer programmes about which the evidence is either suppressed or massaged in a conspiracy to support the case for conditional cash transfers!
Before looking at two examples of such schemes (or schemings), let us take stock. Conditional cash transfers (CCT) require beneficiaries to meet one or more conditions before they receive their transfer: for example, to ensure their children are enrolled in, or attend, school, or to have their children inoculated or regularly visit health clinics. Unconditional cash transfers (UCT) do not: they provide the transfer to everyone eligible, regardless of their behaviour.
CCTs fit much better with the World Bank’s philosophy of seeing social protection in dispassionate, purely economic terms. As a recent publication by the Brooks World Poverty Institute puts it:
The World Bank conceptualizes
social protection as social risk management and proposes policies that seek ‘to
assist individuals, households and communities in better managing income risks’ (Holzmann and
Jorgensen, 1999: 4). It moves beyond what it sees as ‘traditional’ social
protection by adding the goals of macroeconomic
stability and financial
market development. The emphasis on risk assumes that vulnerability to hazards
is a significant constraint on economic and human development, and that efforts
to reduce the likelihood of hazards, or to ameliorate their effects on living
standards, are essential for economic
growth and development
[emphasis added]
So the World Bank has been promoting CCTs all over the world, and has recently published a 383-page eulogy on CCTs. There can be no doubt in the reader’s mind after perusing this (or even its 28-page “Overview”) that CCTs have been remarkably successful in achieving their objectives of better education, nutrition and health outcomes for their recipients.
But - and this is the nub of the problem - UCTs have done exactly the same. Unconditional programmes, for example in South Africa, Namibia and Malawi, have been every bit as successful in improving health and education indicators among their beneficiaries as CCTs. So there is a legitimate question to be asked of the World Bank: why bother with the moral hazard, additional cost and complexity of imposing, monitoring and enforcing conditionalities, when unconditional programmes appear to have the same effects?
Answering this question is difficult, because it is almost impossible to unpick the reasons why a CCT programme works: is it because of the conditionality, because of the attendant awareness-raising, or simply because of the cash transfer itself. As Samson et al put it when discussing Mexico’s Oportunidades programme:
[CCTs] combine three key
mechanisms: grants that increase the income of poor households, awareness
promotion that emphasises the importance of human capital, and conditionalities
that link the two – making the grants conditional on behaviours that reinforce
human capital development. The evaluations have successfully demonstrated that
all three of these ingredients together can generate very positive results.
However, the studies so far have been unable to identify which is most
important – the income, the awareness or the conditionality[i]
But, just occasionally, the opportunity arises for the Bank to try to demonstrate that it is the impact of conditionality that determines the beneficial impact. And we document here two example of the lengths to which it will go to take full advantage of these opportunities - two Conspirational Cash Transfer schemes in Ecuador and Malawi.
The first, less flagrant but still revealing, comes from an evaluation of the impact of Ecuador’s Bono de Desarrollo Humano (BDH) cash transfer program on school enrolment and child work among poor children. The unusual thing about this programme was that (unlike most other such programmes in Latin America) it was not in fact conditional … though a number of its beneficiaries were under the impression that it was. This allowed a comparison of impact between recipients who were “conditioned” (i.e. who thought there were conditions attached) and those who were “unconditioned” (i.e. who thought there were no such conditions), which is discussed in a paper by Schady and Araujo[ii].
What is interesting here is the marked difference in the conclusions between a first version of the report dated November 27, 2005 (now virtually unobtainable), and the version published officially as World Bank Policy Research Working Paper 3930 in June 2006. The respective abstracts are already instructive. The earlier version reads as follows:
We conclude that the program had positive effects on enrolment, and negative effects on child work. Enrollment effects are concentrated among the poorest children in our sample. We also show that the impact of the BDH program was largest among households who believed that transfers were conditional on school enrolment, although the effect of the (unenforced) condition appears to have interacted in important ways with baseline socioeconomic status [emphasis added]
The published version reads very differently:
The main results in the paper are two. First,
the BDH program had a large, positive impact on school enrollment, about 10
percentage points, and a large, negative impact on child work, about 17
percentage points. Second, the fact that some households believed that there
was a school enrollment requirement attached to the transfers, even though such
a requirement was never enforced or monitored in Ecuador, helps explain the
magnitude of program effects.
What has happened to the caveat about “interaction with baseline socio-economic status”? In the body of the first report, it is clear that - even at baseline - there are marked, observable differences between the “conditioned” and “unconditioned” samples:
Conditioned households had significantly higher
levels of both paternal and maternal education, children in these households
were significantly more likely to be enrolled in school, and conditioned
households were significantly more likely to have a television.
Such differences may well explain any differences in subsequent impact between the two groups. [There is also the obvious consideration, that, since the evaluation was based on self-reported school attendance and not on objective evidence such as school records, it is far more likely that respondents who believed the transfer to be conditional upon school enrolment would lie about it, compared with those who knew that telling the truth would have no impact on their entitlement. This would greatly inflate the apparent impact on enrolment for “conditioned” households.]
Overall, the findings in the earlier version are hedged around with provisos, recognising that:
… enrolment regressions at baseline suggest that observable rather than unobservable differences between conditioned and unconditioned households explain differences in their enrolment decisions. We do not have the data to conclusively rule out this possibility [emphasis added]
…
we believe that it is most likely that the perceived, although
unenforced conditions played some
causal role explaining the large program effects among better-off, conditioned
households [emphasis added]
And the conclusion is correspondingly circumspect:
It
would not be wise to conclude from our results that simply announcing that
households have to comply with certain conditions, without enforcing them, will
substantially affect household behavior in the long run, in Ecuador or
elsewhere
In the published Working Paper (only six months later) such doubts are swept away:
Although the comparison of lottery effects for conditioned and
unconditioned is not experimental, we conclude that the general pattern of
results is most consistent with the (unenforced) BDH schooling requirement
having a causal effect on outcomes
In Ecuador, significant program effects on enrollment are only found
among households who believed that there was an enrollment requirement associated
with the program; this suggests that this unenforced condition was important
Interestingly, another contemporary study of the same programme in Ecuador[iii] finds “no significant impact of the program on school enrolment” and concludes that “the enforcement of conditionality has not any significant effect on school enrolment among the less poor”. This further underlines the need to retain the important caveats of the first version of the World Bank report.
The second egregious example of a Conspirational Cash Transfer is more recent, and comes from a World Bank experiment in Malawi. This was an evaluation of the impact of a randomized conditional/unconditional cash transfer intervention targeting young women in Zomba district that provides incentives (in the form of school fees and cash transfers) to current schoolgirls and young women who have recently dropped out of school to stay in or return to school. Splitting the sample - between some that received a transfer conditionally, some that received it unconditionally and some that received no transfer at all - allowed a comparison of different impacts between the three different groups.
Here again we can observe an unexpected evolution in the published results. The first set of findings is drawn from a publicly available PowerPoint presentation[iv] of the study. This concludes unequivocally that:
We don’t find any evidence that the conditional
transfers are more effective in improving schooling
And it suggests that the best way to design a cost-effective program, based on the lessons learned, would be “possibly foregoing the conditionality”!
Indeed, looking at the data presented (which unfortunately appears on slides in the PowerPoint that cannot be cited), it is clear that there is no significant difference at all between the conditioned and unconditioned groups in terms of school enrolment or literacy in English; and that it is the unconditioned group that performs better in terms of avoiding early marriage. Altogether, on this basis, the study would not appear to present a strong argument in favour of CCTs!
Yet what do we find when the same study is published as official World Bank Policy Research Working Paper 5089[v]? Miraculously the selfsame findings are used to proclaim:
Overall, these results suggest that conditional
(sic) cash transfer programs not only serve as useful tools for improving
school attendance, but may also reduce sexual activity, teen pregnancy, and
early marriage
283 of these girls resided in EAs where the
offers for baseline schoolgirls were not conditional on school attendance, and,
as such, are not part of the analysis for this paper
How convenient! Secondly by arrogating to conditional cash transfers all of the benefits that should rightly be ascribed to cash transfers. Another footnote on page 12 brushes this aside:
Finally, baseline schoolgirls in a randomly
selected small percentage of the EAs received unconditional offers,
meaning that the transfers were not conditional on school attendance, or any
other behavior other than showing up to collect monthly payments, for these
beneficiaries in those EAs. The analysis of the heterogeneity of the impacts
with respect to each of these design features is beyond the scope of this
paper. Here, we aim to establish the average effect of the conditional
treatment arms, which may not equal the
treatment effect of the average treatment if these impacts are nonlinear [emphasis added]
Quite so! The result is that an experiment which has actually demonstrated that unconditional transfers are every bit as effective as conditional transfers has now been manipulated to support a claim that:
schooling CCTs (sic) for
young women in the context of poor Sub-Saharan countries with high HIV rates
seem like “win-win” programs, as they may not only increase schooling for young
women, but also significantly reduce their risk of HIV infection.
Yes, the Zomba programme does appear to have extremely promising impacts: large increases in self-reported school enrolment, and declines in early marriage, teenage pregnancy, sexual activity, and risky sexual behaviour. But to claim that this has anything to do with conditionality per se is highly disingenuous. It is self-evidently the cash transfer and not the conditionality that is the cause.
Here we have an important debate, but it is one that should be aired openly and honestly. Policy-makers should be aware of both sides of the argument, and should not allow themselves to be pushed into Conditional - and still less into Conspirational - Cash Transfer programmes!
[i] Samson, M., van Niekerk, I., and MacQuene, K. (2006) ‘Designing and Implementing Social Transfer Programmes’, Economic and Policy Research Institute Press, Cape Town: EPRI
[ii] Schady, N., and Araujo, M. ‘Cash transfers, conditions, school enrollment,
and child work: Evidence from a randomized experiment in Ecuador’
[iii] Ponce, J., The Impact
of a Conditional Cash Transfer on School Enrollment: the Bono de Desarrollo
Humano of Ecuador”, FLACSO Documento de Trabajo 06/302, April 2006
[iv] Available at http://www.fundp.ac.be/eco/recherche/cred/SUMMERSCHOOL/amid/ozler2.pdf,
June 2009
[v] Baird, S., Chirwa, E., McIntosh, C. and Özler, B., The Short-Term Impacts of a Schooling Conditional Cash Transfer Program on the Sexual Behavior of Young Women, World Bank, Oct 2009
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