Connubial Cash Transfers

This blog first appeared on the Wahenga website, under the pseudonym of Sissy Teese

With some reluctance, I take up the cudgel again!

I have recently had the good fortune to read the Bank’s latest Policy Research Working Paper (No 5259)[i]. This is another fascinating, meticulously researched and well-argued paper about the same cash transfer programme in southern Malawi that was cited in our earlier wahenga exchanges about the impact of conditionality on schooling - the Zomba Cash Transfer Program (ZCTP). Entitled “Cash or Condition”, the Paper’s specific objective is to disentangle the impact of the condition from the impact of the cash transfer by reporting on the first “ideal experiment to answer this question – i.e. a randomized controlled trial with one treatment arm receiving conditional cash transfers, another receiving unconditional transfers, and a control group receiving no transfers” [emphasis in original].

Not even I could fail to be impressed by the refreshing candour of the Abstract, which states unequivocally that:

 “the authors find that the program reduced the dropout rate by more than 40 percent and substantially increased regular school attendance among the target population of adolescent girls. However, they do not detect a higher impact in the conditional treatment group” [emphasis added].

After such an admirable display of openness, it might seem churlish to complain! But there are a couple of more worrying findings which emerge from the Working Paper that shed further significant light on the debate between CCTs and UCTs. One of these is clearly recognised in the paper (although, noticeably, it doesn’t make it into the Abstract!), while the other is tucked away unobtrusively in a footnote.

The first is that UCTs dramatically reduce the probability of early marriage, while CCTs do not:

 “the unconditional treatment reduced the probability of marriage by 2.7 percentage points (or by 56%), whereas the marriage rate in the conditional group was identical to that in the control group”.

The paper suggests a dispassionate economic argument to evoke “the possibility that a CCT offer could actually trigger marriage by presenting the girl with an untenable schooling alternative and forcing the household into a decision [of early marriage] at the time of the offer” [emphasis added]. But might there not be another, more human, explanation: that beneficiaries of unconditional transfers feel more empowered, and more independent, and more confident of making sensible life-choices than recipients of conditional transfers from an intrusively paternalistic nanny-state? This would after all, conform to standard economic theory, helpfully reiterated in this Working Paper, that “in the absence of externalities, conditional cash transfers are worse than distributing an equivalent amount of unconditional cash”. 

The second, perhaps even more serious, concern is tucked away in a footnote:

 “the program led to substantially elevated stress and psychological morbidity among adolescent girls in the conditional group relative to the unconditional arm”.

Again, the implication is clear. The imposition of conditionality places additional stress on the recipient, and creates tensions within the household between those that must adhere to the conditions (in this case, the school-age girls) and those that benefit from the transfer (siblings, parents, carers, grandparents). What is worse, the authors “also find that the mental health of the CCT recipients worsen [sic] when the transfer amount offered to the parents is larger, while the mental health of UCT recipients is uncorrelated with the transfers offered to the parents”. In other words, the higher the value of the transfer that rests on fulfilling the conditions, the greater the stress for CCT recipients.

Surely these are serious concerns, and a reason to argue more forcefully in favour of unconditional transfers? What this impressive study tells us is not only the already important message contained in the conclusion that: 

“given that the marginal impact of imposing a schooling conditionality is at best low [it is in fact absent!], and that monitoring school attendance to enforce the conditionality is costly, it seems that policymakers can consider unconditional cash transfers as a viable alternative”.

It also raises two potentially damaging criticisms of conditionality, and therefore two significant advantages of UCTs, which - at the very least - merit critical attention and further research. These are:

1)    That, “while unconditional cash transfers nearly eliminate marriage in our study population, the conditional cash transfers have no effect on it”. Early marriage is seriously detrimental to girls’ education (in Latin America and elsewhere, as well as in Malawi), so reducing it, through whatever mechanism, would be a highly desirable outcome in building human capital and reducing the inter-generational transmission of poverty.

2)    That - as might indeed rationally be expected - imposing conditions can inflict psychological damage and create intra-household tensions. Instead of feeling empowered and independent, recipients may feel bullied, pressured and ultimately overwhelmed by the conflicting demands imposed on them, forced into making behavioural choices (like early marriage) that they would otherwise eschew.

Should these two issues not have been given greater prominence in a truly balanced Working Paper, intended as it is to “inform policymakers as to which combination of contract parameters might allow cash transfer programs to deliver the largest impacts per dollar spent”? Should policymakers not be told, upfront, that, on the evidence emerging from Malawi, unconditional transfers have identical benefits in terms of school enrolment and attendance to conditional transfers, while being far less complex and less expensive to implement; and that they appear to be much more effective in reducing disruptive early marriage and minimising psychological stress?

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[i] Baird, S., McIntosh, C. and Özler, B., ‘Cash or Condition? Evidence from a Randomized Cash Transfer Program’, World Bank, March 2010