Basic Income: a BIG disappointment

The original version of this blog appeared on Development Pathways

Anyone who has come across any of my earlier blogs probably knows that I have a marginal preference for inclusive life-course approaches to social protection! I have always assumed, therefore, that when eventually the conditions were right for universal basic income, I would be an avid supporter of basic income grants (BIG) and the like. But that time now seems to be approaching, and I find that I am not a BIG fan!

CoViD-19 has sparked a mass of interest in “basic income”. South Africa’s Minister of Social Development has advocated it; Spain has promised it on a permanent basis; UNDP has argued for it globally (at least on a temporary basis); South Korea, Hong Kong and Singapore have used universal cash transfers as a response to the pandemic, with Japan apparently also planning to do so; Tuvalu is paying a monthly grant to every one of its citizens for the duration of CoViD. The social protection world is abuzz that basic income’s time has finally come, some 500 years after Thomas More wrote, in his “Utopia”, that “it would be far more to the point to provide everyone with some means of livelihood, so that nobody’s under the frightful necessity of becoming, first a thief, and then a corpse.”

But the more you look at basic income, the less attractive it seems, at least from a social protection perspective.

Let’s begin with what we mean by “basic income”. At least that’s straightforward: you just give money to everyone. But actually it turns out not to be so straightforward. The Basic Income Earth Network (BIEN), probably the foremost global forum, proposes that “A Basic Income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement”.

The first thing to note about this definition is that “basic income” is synonymous with universal basic income: the “universal” in “universal basic income” is tautologous, since “basic income” is already paid to “all”. Wikipedia confirms this: “Basic income, also called universal basic income (UBI), citizen's income, citizen's basic income, basic income guarantee, basic living stipend, guaranteed annual income, or universal demogrant…”. But it creates an inconsistency. If we think of an alternate type of social security, say a “child benefit” or a “social pension”, then a “universal child benefit” would be definitionally distinct from a “child benefit”, and a “universal social pension” from a “social pension”, by virtue of necessarily being paid to all members of that category rather than just some. By contrast, in theory, there is an absolute requirement that basic income must be paid to all individuals of all ages in a particular society.

BIEN expands its definition to separate out five key characteristics of basic income:

·       Periodic: it is paid at regular intervals (for example every month), not as a one-off grant.

·       Cash payment: it is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not, therefore, paid either in kind (such as food or services) or in vouchers dedicated to a specific use.

·       Individual: it is paid on an individual basis – and not, for instance, to households.

·       Universal: it is paid to all, without means test.

·       Unconditional: it is paid without a requirement to work or to demonstrate willingness-to-work.

The World Bank’s comprehensive “Exploring Universal Basic Income: a Guide to Navigating Concepts, Evidence and Practices” (Gentilini et al, 2020) begins by observing that: “The debate on a UBI is often chaotic and without precise definitional contours”. It goes on to characterise basic income along three different axes of social protection: that it is cash, rather than in-kind; that it is universal, rather than targeted, and that it is unconditional. These three criteria map well to three of BIEN’s five. The Bank is not explicit in its classification that payments should be to individuals rather than households, nor that they should be made at regular intervals. But in its subsequent categorisation of different programmes, it does add an additional consideration: that basic income should be state-led.

However, when you reflect more on these characteristics through a social protection lens, it becomes clear that they are still incomplete:

·       Frequency – from a social protection perspective, the frequency of payments matters. It is not enough to say (as BIEN does in its definition) that payment must be “at regular intervals (for example every month)”. Paying once every decade is “regular”…but useless for providing social support. So, we need to be clear: the frequency of transfers should be monthly, or at worst every two months.

·       Flat-rate – the concept of paying something to everyone is clear, intuitive and appealing (at least to a universalist), but the definitions above are coy about whether this should be at a flat rate to everyone. But surely, logically it should? Otherwise, a basic income becomes rather less simple and basic. Because if you then need to differentiate to give different amounts to young children, older persons, those with disabilities, those who are employed and so on, then you are not really solving the problems of existing life-course social security. So, rationally, basic income should be paid at a flat rate.

·       Coverage – The definition suggests that basic income should be “paid to all”. But “all” of what? BIEN and the World Bank are silent on this. But Wikipedia boldly ventures that it “can be implemented nationally, regionally, or locally”, with nothing to define the scale of what might be meant by “local”. But, surely, we need to be clear that we are not talking about providing income support just to a single village (as a number of basic income pilot programmes do): it has to be national in coverage, either to every citizen or to every resident.

·       Duration – Especially from a social protection perspective, income transfers have negligible value unless they are delivered consistently over a sustained period, so that individuals can be confident of making plans around them. So basic income, in common with all forms of social security, must be multi-annual.

So, we find that we now have ten necessary characteristics of basic income:

·       regular payments

·       at monthly intervals

·       in cash

·       universally

·       to individuals

·       at a flat rate

·       with full national coverage

·       unconditionally

·       by the State

·       on a pluri-annual basis.

Based on these characteristics, there has only been one operational example of true basic income anywhere in the world: the Subsidy Reform Programme in Iran, from 2010 onwards.

And this definition makes a mockery of many of the current claims of providing basic income. Looking at programmes in the recent past, the Basic Income Experiment in Ontario, Canada, was limited to a particular age group (18-64), was household-based, was means tested, had a variable rate, and didn’t provide cash (it was essentially a negative income tax); Finland’s KELA-run programme targeted only unemployed adults, and only a small sample of those; and Barcelona’s B-MINCOME is highly selective (even within its limited geographical neighbourhood) among only those already having a file with social services, and it is means-tested, household-based, age-restricted (25-60), variable-rate and conditional (at least in some of its treatment arms)! Finally, the many renowned basic income pilots (such as SEWA in India, GiveDirectly in Kenya, BIG Coalition in Namibia) are by definition not national in coverage (or anywhere near it – most cover less than 2000 individuals) and are not state-led.

Post-CoViD enthusiasm shows similar incongruity. South Africa’s Minister rowed back fairly swiftly to clarify that she was only talking about basic income for the 18 to 59 year age group (or perhaps as a priority just “the most vulnerable groups of our population … the youth between 18 and 24 and the elderly between 50 and 59”). Spain’s “basic income” proposals are household-based and tightly poverty-targeted. UNDP’s is explicitly “temporary”. South Korea, Hong Kong, Singapore and Japan are only initiating one-off (or two-off, in Singapore’s case) payments: furthermore, South Korea’s is household-based, Hong Kong’s excludes under-18s, and Singapore’s is only for over-21s. Even Tuvalu is proposing payments to its 11,500 citizens only for the duration of CoViD-19. So, no imminent prospect of true basic income.

Perhaps basic income has a useful role in distributing dividends generated by national resources and assets, such as the ongoing Alaska Permanent Fund, the short-lived Human Development Fund in Mongolia, Macau’s Wealth Partaking Scheme, the casino profits of the Eastern Band of Cherokee Nations, or the one-off Scheme $6,000 in Hong Kong. But surely social protection requires a more nuanced approach? This is because good social protection (by which I mean inclusive rights-based life-course social protection!) should reflect the vulnerabilities faced at each stage of the life-course and should be designed in such a way as to help achieve the government’s objectives for that stage. A flat-rate transfer to everyone is far too blunt an instrument.

In most countries, for example, existing old age pensions are significantly higher than existing child benefits, reflecting their different objectives: a pension to allow people to live in dignity, to meet the increased costs of healthcare and to contribute to supporting others in the household; a child benefit to meet the objectives of good nutrition (for mother and child), early childhood development and access to education. Support to persons with disabilities often entails a higher transfer still, to compensate the additional costs involved in participating fully in society (which is not taken into account by a basic income). And transfers to people of working age should be designed primarily to support their engagement (or re-engagement) with the labour market, to recompense them for unemployment or unpaid work, for example in the care economy, or when they are sick. These different sets of objectives at different life-course stages require different programmes, often with different funding mechanisms, for example through a mix of contributory and tax-financed schemes.

What governments have an opportunity to do now, in response to CoViD-19, is not to introduce basic income across the board, but to fill the gaps that have been revealed in their existing programmes to move towards universal life-course coverage. Child benefits, old age pensions and disability allowances should be made universal, and integrated systems should be put in place to provide income support to all those of working age who need it (which in many countries has emerged as the most glaring lacuna). This could conceivably be in the form of a universal flat-rate transfer to all in that age group (though this would still not count as basic income by the strict definition). But it could also be achieved through judicious integration of contributory and tax-financed approaches to ensure that everybody receives such support when they need it.

That would indeed be a BIG step in the right direction, and – for social protection purposes at least  – a much better option than More’s utopian vision!

Crocodiles and CROCO Dials

The original version of this blog appeared on Development Pathways

I have just read a paper[i] on social protection in Africa with which I profoundly disagree. It has a good main title – “Beware of the Crocodile” – but it goes steadily downhill from there. Even the sub-title is misleading: “Quantitative Evidence on How Universal Old Age Grants Distort the Social Assistance Systems of Low-Income Countries”. It’s about as “quantitative” as Roald Dahl’s “The Enormous Crocodile”; it provides as much solid “evidence” as one of Rudyard Kipling’s “Just So” stories (perhaps “How the Crocodile Got its Teeth”); and the two countries whose “old age grants” have allegedly “distorted their social assistance systems” are not in fact “low-income” countries!

The paper compares the old age pensions in Eswatini and Lesotho (both lower-middle-income countries) with the Social Cash Transfer (SCT) programme in Malawi. It argues for the virtues of the latter programme, despite the fact that it represents an approach that has single-handedly set back social protection in parts of Africa by more than a decade. The paper falls into all the customary crocodile traps: that it is better to target households than individuals; that you can accurately select beneficiaries based on poverty; that, if you can make someone work for their social protection, you should (a throwback to nineteenth-century poor relief); and a whole load of similar crock[ii].

But its most egregious and unwarranted assumption is that the budget for social protection is fixed. It posits that if more is spent on one flagship programme of social protection, then less will be available for other programmes (“The OAG grew and is still growing like the famous crocodile, which became bigger and bigger eating all the other crocodiles on their small island”). But the reality, as we have seen historically in higher-income countries, is that the opposite is true! Once a country implements a rights-based life-course entitlement programme, the likelihood is that not only will that programme expand, but also that other life-course programmes will start to be introduced. Both Lesotho[iii] and Eswatini[iv] now have child-oriented programmes (funded by government) alongside their old age pensions, and Eswatini has a disability benefit. Malawi has nothing other than its SCT (except public works and school feeding which all three countries have).

Based on these fundamental misperceptions and its flawed analysis, the paper comes down in favour of Malawi (and other countries which have adopted the same blinkered approach): “the performance of their social assistance systems is by far better [sic] compared to the performance of the social assistance systems in Eswatini and Lesotho”.

This got me thinking: how does one compare the “performance” of social protection systems across countries? Like a good crocodile, how would I get my teeth into this absurd assertion in order to refute it? And I decided it came down to five criteria, which can, appropriately, be summarised by the acronym CROCO: Coverage, Rate, Ownership, Continuity and Opportunity. To “perform” well, a social protection system should have high Coverage, its Rate of transfer should be meaningful, it should be Owned by government, it should have Continuity over time, and it should create the Opportunity for further expansion. As we shall see, by all of these metrics, the old age pensions in Eswatini and Lesotho outchomp the SCT in Malawi.

Let’s start with Coverage and Rate. These are interlinked, because it is difficult to compare coverage between programmes that are based on individual entitlement with those that are allocated to households, especially when, as in Malawi’s case, the rate of the transfer is (a) banded according to household size and (b) includes a bonus for school-going children. In terms of Coverage pure and simple, Malawi’s SCT is paid to only 280,000 household heads, out of a national population of 18 million (representing 1.6 percent coverage), compared with Eswatini’s old age pension which goes to 70,000 individuals out of a population of 1.1 million (6.4 percent) and Lesotho’s which goes to 80,000 out of a population of 2.1 million (3.8 percent). One could reasonably argue, however, that the coverage of Malawi’s SCT should include every household member as a beneficiary (though the same is of course equally true for the pensions![v]): on this basis the coverage of individual household members under Malawi’s SCT would be about the same as Eswatini’s coverage of individual pensioners and higher than Lesotho’s.

But this then brings us to the question of the Rate of the transfer. Because it lacks domestic political traction, the real value of Malawi’s SCT has diminished over the years (it is now worth on average around USD9/month/household), while the value of Eswatini’s and Lesotho’s pension transfers have increased at a faster rate than inflation (they are now USD25/month and USD42/month respectively). To fairly compare coverage and rate between programmes we need to judge consistently at the level either of the household or of the individual within the household. So either we can conclude that Malawi’s SCT has a similar coverage of individuals to the other two programmes but at a vastly lower rate (a one-person household in Malawi gets USD3.50 each month and each individual in a larger household even less than that, compared with USD25 and USD42 per individual in Eswatini and Lesotho respectively). Or we can conclude that, at the household level, Malawi’s has both a much lower coverage (a quarter and a half respectively) and, even then, a substantially lower rate of transfer. As an example, a household of six, containing two older persons, two adults and two children might receive around USD10/month in Malawi, while the same household in Lesotho would receive USD84 (plus, potentially, further support for children). On whatever basis you compare, the SCT’s performance can only be judged to be significantly worse.

The next measure of performance is Ownership. The old age pensions in Eswatini and Lesotho are – and have been since they began in the early 2000s – fully funded by their respective governments. They also both emerge from autochthonous political processes, so are genuinely home-grown responses to the particular challenges faced in the two countries[vi]. The Malawi SCT relies – and has done ever since it began[vii] – on external donors for some 90 percent of its funding. It is also an imposed model, an imported carbon copy of the Kalomo pilot in Zambia, owing little to domestic political impulsions. This is reflected in the much higher place on the political agenda for the pensions in Eswatini and Lesotho, as manifested in the increasing value of the transfers: pensioners demand, and usually get, a Cost of Living Adjustment each year. Similarly, at one stage, when pensions weren’t paid on time, Eswatini had to shut down its parliament until the situation was resolved. Contrast that with the lack of accountability and the absence of a sense of entitlement among SCT beneficiaries in Malawi.

The lack of national Ownership has serious implications for the Continuity of the programme, surely another important measure of “performance”. It took more than ten years to scale up Malawi’s SCT from a single district to every district in the country, whereas Eswatini’s and Lesotho’s pension began as, and have remained, truly national programmes. The SCT programme has limped from one funding crisis to another and is now a patchwork of separate donor-funded initiatives: some districts are funded by the World Bank, some by the EU, some by KfW, some by Irish Aid and so on. The worst-performing district has traditionally been the single one funded by the Government, Thyolo. What are the prospects for continuity after the development partners pull out? In contrast, the old age pensions have become established elements of the domestic political landscape in Lesotho and Eswatini. Their future is guaranteed, and evidence from their evolution to date suggests that they will play an increasingly valuable role in the national social protection policies of both countries.

This provides the Opportunity for further expansion. Lesotho and Eswatini have the chance to progressively expand their coverage to provide entitlement-based social protection appropriate to the vulnerabilities and objectives at each stage of the life-course (as has happened over the years in neighbouring South Africa). By contrast, the danger of relying solely on an unintuitive and discretionary programme like Malawi’s may actually deter its government from instituting proper social protection, as indeed has proved to be the case in some of the countries similar to Malawi that the paper cites (e.g. Zimbabwe, Ethiopia, Mozambique). Zambia, in contrast, offers an illuminating example where the massive expansion of the programme through increased government ownership and domestic funding only occurred after it shifted from being a household-based discretionary programme on the same Kalomo model as Malawi’s to being substantially an entitlement programme for the elderly and those with disabilities. Fortunately, there are early signs in Malawi of recognition of the need for such a shift: a 2016 study by the Ministry of Gender, Children, Disability and Social Welfare found that a universal old age pension was feasible and desirable and, in late-2018, a Private Member’s Motion proposed this measure in Parliament.

It is clear, using all of these CROCO dials, that the two old age pensions perform much better than Malawi’s SCT. Does it matter that the paper turns out to be making false claims? Well, yes, it does, because Malawi’s programme (and others like it) negatively impact the potential of social protection in Africa. The paper suggests in a muddled way that there is a distinction between “systemic universalism” and “programmatic universalism” (presumably in both case intending to use the word “universality”, since “universalism” is a theological belief in the existence of fundamental truths!). But by no stretch of the imagination can Malawi’s social protection be described as universal: its SCT is a tokenistic social assistance programme for “the poor”, providing inadequate levels of support (from largely external donor resources) to far too few beneficiaries. Pretending that this is a model to be followed actually damages the prospects for introducing rights-based social protection of the kind we are beginning to see in Eswatini and Lesotho. This is true not only in Malawi, but also in countries like Ethiopia and Zimbabwe, where the existence of such social assistance for poor households has similarly blocked the development of genuine life-course based social protection. Unless these countries can break away from the Kalomo model, as Zambia itself has done, they are heading (like Captain Hook in Peter Pan) in only one direction: into the crocodile’s jaws. Tick tock!

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[i] Schubert, Bernd, 2020. Beware of the Crocodile: Quantitative Evidence on How Universal Old Age Grants Distort the Social Assistance Systems of Low‐Income Countries. Poverty and Public Policy, Volume 12 Issue 2 pp188-205.

[ii] Merriam-Webster helpfully provides a number of synonyms for “crock”, among them: balderdash, baloney, bilge, blarney, blather, blatherskite, bosh, bull, bunk, bunkum, claptrap, codswallop, drivel, drool, fiddle, fiddle-faddle, fiddlesticks, flannel, flapdoodle, folderol, folly, foolishness, fudge, garbage, guff, hogwash, hokeypokey, hokum, hoodoo, hooey, horsefeathers, humbug, malarkey, moonshine, nonsense, nuts, piffle, poppycock, rot, rubbish, senselessness, silliness, stupidity, taradiddle, tommyrot, tosh, trash, trumpery, twaddle.

[iii] The share of the social assistance budget allocated to the child support grant in Lesotho has increased from 6 percent in 2016/17 to nearly 10 percent in 2018/19, which suggests it is not simply crocodile-fodder!

[iv] Eswatini’s education grant pays USD120 per academic year for 51,000 beneficiaries (nearly 5 percent of the total population) – again a fairly meaty programme.

[v] Interestingly, the paper rather disingenuously makes this same point when talking about the Eswatini OAG. It argues “For a household with seven or more members (the average household size of extremely poor households is 6.5), a grant of L400 is insignificant”. Yet this ignores the fact that even in such an extreme case the per person value of the Swazi OAG would still be over USD3.50 per month compared with about USD1 per person per month for the same size of household on Malawi’s SCT!

[vi] The paper asserts, somewhat gratuitously, that “In 2005, Eswatini followed the advice of HelpAge International (HAI) and of the Regional Hunger and Vulnerability Programme (RHVP)—both financially supported by the UK Department for International Development (DfID)—to launch a universal OAG”. In reality, RHVP did not even begin until July 2005, some four months after the OAG had made its first payments in April 2005! The OAG is a home-grown Swazi initiative.

[vii] There is an incorrect suggestion (and a further sleight-of-hand over dates) in the paper when it states that “When Malawi in 2010 started to consider and eventually introduce social protection, it based it on a quantitative and qualitative analysis of the poverty and vulnerability of different population groups.” This ignores the reality that the SCT actually began in 2006, preceded by very little in terms of analysis.

Thidwick in Ethiopia

Many years ago, in an early online discussion about graduation, hosted by the Centre for Social Protection, John Hoddinott memorably likened social protection to a character in his favourite children’s book, Thidwick, the Big-Hearted Moose. I would like to borrow his splendid analogy to talk about Ethiopia’s Productive Safety Net Programme (PSNP).

Dr Seuss was the nom de plume of Theodor Seuss Geisel, who wrote (and himself illustrated) a series of excellent children’s books during the 1940s and 1950s. The best know are probably The Cat in the Hat, How the Grinch Stole Christmas and Green Eggs and Ham. In total his children’s books have sold over 600 million copies.

For those of you who haven’t had the pleasure to read Dr Seuss’s books, I strongly recommend them. Thidwick, the Big-Hearted Moose, published in 1948, tells the story of a moose, who is asked for a lift by a Bingle bug:

The bug called out,

“Hey! It’s such a long road

And it’s such a hot day,

Would you mind if I rode

On your horns for a way?”

Thidwick kindly allows the Bingle bug to ride in his antlers. And the bug is soon joined by a Tree-spider, and then a Zinn-a-zu bird, who pulls out 204 of Thidwick’s hairs to make a nest…where he is immediately joined by his new wife and her uncle, a woodpecker who “started in drilling”. A family of squirrels moves in to the four holes the woodpecker has drilled in Thidwick’s antlers; then a bobcat and a turtle, and:

They asked in a fox, who jumped in from the trees,

They asked in some mice and they asked in some fleas

They asked a big bear in and then, if you please

Came a swarm of three hundred and sixty-two bees

By now the rest of the moose-herd has abandoned Thidwick, to winter on the other side of the lake, where “moose-moss” is plentiful but whither Thidwick cannot swim because of the unwanted guests on his antlers. At the dénouement, he finds himself prey to a group of hunters from the Harvard Club:

“Get that moose!

Get that moose!”

Thidwick heard a voice call

“Fire again and again,

And shoot straight, one and all!

We must get his head

For the Harvard Club wall!”

This sorry situation exactly parallels what has happened with PSNP in Ethiopia. It was conceived in 2004 as a seasonal workfare programme for the most food insecure households, paying them a small wage in return for their labour over six months of the lean season. It has become something of a flagship over the years, expanding to reach over ten million Ethiopians in a bad year. It is an international showcase of how to convert annual “emergency” response into a comprehensive multi-annual programme of support to chronically vulnerable households.

However, because it is the only significant social assistance intervention in Ethiopia, PSNP has become a victim of its own success. The seed was sown from the very outset, in 2005, when the donors insisted that it should include a component of direct support for those poor households that had no labour capacity. With the benefit of hindsight, this was PSNP’s Bingle bug: it seemed principled and sensible at the time, but it opened the door for more and more to be loaded on to PSNP. Slowly, over its four phases since 2005, PSNP has taken on more and more diverse encumbrances, just like Thidwick. First, the direct support component has expanded and diversified, to include support to the elderly, those with disabilities, pregnant and lactating women, and the mothers of acutely malnourished children. Second, it now finds itself overburdened with health insurance, gender and social development, nutrition, WaSH, child protection and livelihoods. Phase 5, currently being designed, is intended additionally to reduce child marriage, further enhance nutrition outcomes during the first 1000 days, support early childhood development and ensure school attendance! It is turning into a disability grant, an old age pension, an infant grant, a school bursary and a programme to counter acute malnutrition. Yet it is still at heart a seasonal public works programme whose objective is to improve the food security of working age adults.

There are clearly a number of fundamental incompatibilities, across a range of dimensions, between this original objective and the type of life-course assistance that is now dragging it down. PSNP’s targeting is still based on food insecure households, not vulnerable individuals. Its work requirement is mandatory for those households, but is totally incompatible – even counter-productive – in the case of the other life-course stages. It operates in only a subset of woredas (or districts) that had been most in need of earlier emergency response, whereas life-course vulnerabilities exist in all woredas nationwide. Its six-month duration is wholly inappropriate to those life-course groups requiring full-time support. Its objectives, of providing employment and creating community assets, are equally far removed from those of providing dignity and inclusion for the elderly and those with disabilities, or of providing better nutrition to mothers and infants. And its exit strategy of graduation (however over-optimistic this has proved to be) is very different from the exit strategy of life-course programmes, such as age limits or death. Finally, one of PSNP’s notable features, its scalability and ability to increase coverage in response to unpredictable annual needs, is divorced from the predictable and more inclusive approach needed for life-course social assistance.

Like Thidwick, PSNP is facing an existential crisis. What can be done? Fortunately, Thidwick provides an answer. Faced with the gang of Harvard hunters, and weighed down by his unwanted guests, Thidwick does what all moose do every year:

Finished?

Not Thidwick!

DECIDEDLY NOT!

It’s true he was in a most terrible spot,

But NOW he remembered a thing he’d forgot!

A wonderful something that happens each year

To the horns of each moose and the horns of each deer.

Today was the day,

Thidwick happened to know,

That OLD horns come off so that NEW ones can grow!

Thidwick sheds his antlers and all their unwelcome freeloaders. That is what PSNP needs to do now. It needs to be refocussed on what it was originally designed to do: to provide a seasonal (and shock-responsive) safety net for the working age poor with labour capacity. Its operations could be trimmed back to the essentials, and the focus should be on making it work well. And alongside PSNP, Ethiopia now needs to start to implement a broader range of social assistance interventions, addressing individual vulnerabilities across the rest of the life-course: for those with disabilities, for the elderly, for pregnant and lactating women, for street children, and so on. These programmes can piggy-back on the operational systems that have been developed for PSNP, and can leverage the linkages that PSNP has forged, but they can then pursue their own appropriate objectives, and be coordinated by the Ministry of Labour & Social Affairs rather than the Ministry of Agriculture (as PSNP is now).

There is already an evident recognition of the need for such genuine unconditional social protection across the life-course. The evolution and considerable expansion of what is now called permanent direct support (for the elderly and people with disabilities), and the more recent addition of temporary direct support (for pregnant and lactating women and mothers of malnourished children) are a clear demonstration. And Ethiopia now has a National Social Protection Policy and Strategy, both of which adopt a life-course lens: “Protection from deprivation is particularly critical at key stages in the life cycle, notably during pregnancy, early childhood, and adolescence. At times, individuals need protection because they are unable to work and generate income due to old age and/or disability”. Both documents also identify the vulnerable groups in Ethiopia exclusively in terms of individual vulnerabilities, not in terms of household food insecurity. Furthermore, responsibility for coordination of life-course social assistance is explicitly allocated to the Ministry of Labour & Social Affairs.

Will PSNP be able, like Thidwick, to jettison its extraneous baggage and return to the intervention for the working age poor that it was always meant to be, thereby leaving the space for Ethiopia to develop a comprehensive life-course social assistance package around it? Ironically, this should represent a win:win option: the workfare purists should welcome a return to simple labour-based transfers, while the welfare purists should be delighted to drop the labour requirement and move towards unconditional social assistance for vulnerable individuals. Unfortunately, it is by no means certain this will happen. PSNP has acquired its own momentum: it is like a hugely cumbersome ocean liner, steered by the Government and eleven different donors, each with its own agenda and priorities. Even deviating its course slightly is a major task: turning it around is near impossible. Thidwick himself had faced the same problem when he wanted to swim across the lake:

“We’re fair,” said the bug.

“We’ll decide this by vote.

All those in favor of going, say ‘AYE,’

All those in favor of staying say ‘NAY’.”

“AYE!” shouted Thidwick, but when he was done…

“NAY!” they all yelled.

He lost ’leven to one.

At a time when most countries are trying hard to make their social protection shock-responsive, Ethiopia is facing the challenge of making its shock response socially-protective. To succeed, it will need a more radical approach than just a fifth phase of PSNP. It needs to realise the life-course aspirations enshrined in its National Social Protection Strategy. To achieve this, it should separate PSNP’s permanent direct support into a disability and old age pension. It should transition its temporary direct support into an inclusive first 1000-day grant. And it needs to retain PSNP as a scalable component of the Strategy targeted at the working age poor. Together with free primary and secondary education and with the Community-Based Health Initiative, this would provide a social protection floor of comprehensive coverage through the life-course.

Poor targeting: a response to Development Pathways’ paper on how best to reach those in poverty

The original version of this blog appeared on Development Pathways

Sometimes in life there are things that you know, instinctively, to be true; but you lack the proof with which to convince others. It is then particularly gratifying when the necessary proof emerges.

I have experienced just such a moment of gratification with the appearance of the Development Pathways’ paper on Targeting Effectiveness, "Hit and Miss"! I have always felt that poverty-targeting, in all its forms, is a fundamentally flawed approach to deliver social protection – see my other blogs on this site. The new paper provides incontrovertible proof.

In an ideal world, poverty-targeting would be sensible, which is why it intuitively appeals to those who are new to social protection, or who don’t understand the true complexities of poverty. I would even go so far as to accept that, if all of five conditions were met, there are circumstances in which poverty-targeting might be the optimal choice. But we don’t live in an ideal world, and the Development Pathways’ paper clearly demonstrates how very unlikely it is – in the real world – to fulfil each one of those five conditions, let alone to meet all five simultaneously!

For poverty-targeting to be the best option, all of the following five assumptions need to hold true:

• The poor represent a small residual group
• The poor will remain poor (and the non-poor will remain non-poor)
• Inequitable outcomes are acceptable
• The resource envelope is fixed
• You can accurately identify the poor

Let’s look at each of these in turn, in the light of the evidence presented in the Development Pathways’ paper.

1) The poor represent a small residual group

It only makes sense to undertake the expensive and complicated attempt to target the poor if they represent a relatively small portion of the population. And yet, paradoxically, it is in exactly these circumstances that poverty-targeting is most difficult, as the paper shows. In any case, it is absolutely clear from the paper that in all lower- and most middle-income countries, the number of those who can be considered poor by any comprehensive metric is high: usually in the region of 80 percent. It illustrates this with graphs of the wealth distribution in Brazil and South Africa, and with a telling figure showing incomes in purchasing power parity for five such countries:

In the USA, anyone living on less that US$10 a day would be considered extremely poor. If some 80 percent of the population is poor, it makes no sense to waste money on targeting: the cost of doing so would probably exceed the cost of including the extra 20 percent in the programme, and you would lose many of the political economy benefits of an inclusive universal approach. Conversely, if a much smaller proportion of the overall population is poor, then you still have a serious problem, because the paper shows clearly that poverty-targeting is less and less accurate the lower the coverage – see point 5 below.

2) The poor will remain poor (and the non-poor will remain non-poor)

Poverty is extremely dynamic. The paper gives two examples of such churn in and out of poverty, from Uganda and Indonesia:

These graphs show that in Uganda, only 46 percent of households that were in the poorest quintile in 2013 had been in the poorest quintile in 2011; and, in Indonesia, 38 percent of households in the poorest quintile in 2015 had not been in that quintile just one year earlier. As the paper makes clear, all forms of poverty-targeting would miss this: even the very best such programmes only undertake retargeting every three or four years, and in the vast majority the interval is between five and ten years (for instance, neither Pakistan nor the Philippines has updated its PMT since 2009). There is simply no extant example of a poverty-targeted approach that could capture such volatility in wealth.

3) Inequitable outcomes are acceptable

Even if it could, that would create another challenge. The main reason for such volatility is that, in most low- and middle-income countries, there is very little difference in the income (or consumption) of the poorest 80 percent of the population[1], so even a small change in income, caused by only a minor shock, can knock a household a long way down the wealth distribution. Conversely – and this is where the next challenge comes – making a cash grant to a selected poor household will inevitably propel it far up the wealth distribution, leap-frogging a number of almost equally poor households who are now poorer than the beneficiary household. And yet the beneficiary household is likely to go on receiving the same benefit for a number of years, while the now-poorer households get nothing. This is inequitable, and frequently causes the resentment, jealousy and social tension that are the inevitable by-products of poverty-targeting.

4) The resource envelope is fixed

If you assume that the fiscal space for social protection is fixed and immutable, then there is some justification in arguing that the limited resources should be focussed on the poor. As Devereux[2] argues when presenting the case for targeting, “Given the reality of budget constraints, scarce public resources must be used optimally and allocated efficiently, where they can achieve the maximum impact. If poverty reduction is an objective of public policy, social spending should be directed towards the poor who need income support, not spread thinly over the entire population including to those who do not need it”. But it is wrong to assume that poverty reduction is the only – or even the main – objective of social assistance, and it is naïve to think that budgets are immutable: investment in social protection is a political choice. If politicians spy electoral benefit, the funding will inevitably follow. As a result, the value of transfers is likely to be much higher with universal programmes than with poverty-targeted ones, meaning – ironically – that the poorest do better out of such inclusive programmes than they do when they are specifically targeted.

5) You can accurately identify the poor

Finally, we come to what the Development Pathways’ paper demonstrates to be the killer assumption: that you can accurately identify the poor. It is abundantly clear that you cannot…or at least that current approaches cannot. The paper systematically analyses national household survey datasets from 23 countries, and examines the targeting accuracy of 38 social protection schemes or targeting registries in those countries. It does this using two metrics of targeting effectiveness: (i) the proportion of households incorrectly excluded, when measured against the scheme’s intended coverage; and (ii) the degree of exclusion of the poorest 20 percent of households from the scheme. Both give results that can only be described as lamentable, especially when considering schemes that aim to reach 25 percent of the population or less (representing two-thirds of the programmes studied). In terms of exclusion against intended coverage, the very best performer amongst these has errors of 47 percent, while 12 such schemes have exclusion errors above 70 percent, 8 above 80 percent and 5 above 90 percent (meaning that fewer than one in ten of intended beneficiaries is actually selected). In terms of exclusion of the poorest 20 percent of households (which should logically all be included in a programme aimed at 25 percent of the population), the results are similar: the very best programme excludes 46 percent of the poorest quintile of households, while 12 schemes exclude more that 70 percent of the poorest wealth quintile, 9 exclude more than 80 percent and 4 exclude more than 90 percent – indeed, the worst-performing manages to correctly identify fewer than one in twenty of these poorest households!

The purpose of the paper is not to shame the worst performers, but to demonstrate that the whole approach is fatally flawed. Yet there is a remedy: to increase programme coverage and – ultimately – move to universality. The paper summarises this on a very instructive chart, showing the relationship between coverage and exclusion error:

The best-targeted programmes, using both metrics applied in the paper, are those which have higher coverage of their target populations. Thus, the best results using a PMT, though still not very good, are for the two such programmes where coverage exceeds 40 percent of the intended population: the old age component of Ecuador’s Bono Desarrollo Humano and Uruguay’s Asignaciones Familiares, both of which exclude “only” some 30 percent of their intended recipients and 17 percent of the poorest quintile of households. Similarly, the best example of community targeting, admittedly out of an alarmingly poor set of results, is Rwanda’s Ubudehe classification, covering 30 percent of the population, although this still excludes over half of those intended and half of the poorest quintile of households.

As coverage increases further, exclusion error decreases. South Africa’s Child Support and Old Age Grant, which are means-tested to exclude the most affluent, have over 70 percent coverage of their target populations: exclusion of the intended beneficiaries is only 13 percent and 8 percent respectively; and exclusion of the poorest quintile of households is zero in both cases – in other words every household in the poorest quintile is included, a remarkable achievement. As we move to the four universal programmes analysed in the paper, this finding is further reinforced. Bolivia’s Renta Dignidad and Bono Juacinto Pinto, Georgia’s Old Age Pension and Mongolia’s Child Money Programme all exclude fewer than one in ten of their intended beneficiaries and fewer than one in ten of the poorest households.

The bottom line is that poverty-targeting does not work. The best way to help the poor is not to target them, but to move to higher-coverage programmes, and ideally to universal life-course approaches! I know I have said this before…but now I feel I have the evidence to prove it! Thank you, Development Pathways!

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[1] It is much easier to distinguish the wealthiest 20 percent in such cases, which is probably why the high-coverage, affluence-tested programmes studied in the paper – in particular South Africa’s Old Age and Child Support Grants – perform so well.

[2] Devereux, Stephen, 2016. Is targeting ethical? Global Social Policy, I-16.

What a bunch of Oxymorons in international social protection!

The original version of this blog appeared on Development Pathways

Let me begin by clarifying that an oxymoron is not some kind of bovine nincompoop. An oxymoron defines a phrase that is inherently self-contradictory. The word itself is a good example, deriving as it does from two contradictory Greek words: ὀξύς (oxys), which means sharp or clever, and μῶρος (moros), which means slow or foolish (as in our modern-day “moron”).

Modern usage of the English language is peppered with examples of oxymorons, such as “same difference”, “awfully good”, “deafening silence”, “painfully beautiful”, “open secret”, “oddly normal”, “old news” or “bittersweet”. There are also some splendid examples from the literature, such as Lamb’s “[a smuggler] is the only honest thief”, Shakespeare’s “parting is such sweet sorrow”, Andy Warhol’s “I am a deeply superficial person”, or Tennyson’s double-whammy of “faith unfaithful kept him falsely true”.

Another strand of so-called rhetorical oxymorons can be interpreted more cynically: these would include “Government organisation”, “American history”, “military intelligence” and “Microsoft Works” (or perhaps “public works”). Some might add “Merry Christmas” and “happily married” to this list!).

Unfortunately, the kind of social protection that is commonly peddled by international practitioners is similarly riddled with oxymorons. Some have been around for a while:

•  “Productive safety nets” – such safety nets, traditionally in the form of enforced public works programmes, are not the slightest bit productive when they compel malnourished women to abandon their children to toil for a meagre wage that barely compensates the energy they have to expend.
•  “Conditional social protection” – social protection is not social protection if it can be arbitrarily retracted as a result of a failure to comply with conditions, thereby throwing families into extreme poverty.
• “Graduation from poverty” – a bizarre concept that suggests people can definitively emerge from poverty, as if with a university degree, and no longer require access to social protection.

Probably the most enduring example of an oxymoron in the social protection lexicon is the concept of “poverty-targeting”, which Stephen Kidd has highlighted in a couple of recent blogs (see here). This is inherently self-contradictory at two levels. First, it is linguistically conflictual, apposing a verb that implies high precision (“to target”) to a concept that is totally amorphous (“poverty”). You can no more “target poverty” than you can “measure clouds” or “match waves”. Second it is conceptually deceitful, because – as Stephen has pointed out – it is actually a smokescreen to disguise the fact that its primary objective is to diminish expenditure on social protection, to the detriment of those living in “poverty” who it is ostensibly “targeting”.

Now a new example seems to be creeping into the lexicon: “progressive universalism” – see for example the 2019 World Development Report, which states “A guiding principle for strengthening social assistance is progressive universalism.”. This is slightly moronic, as well as oxymoronic, because “universalism” is usually reserved for the belief, in Christian theology, that all humankind will ultimately be saved through divine grace. Rather than “universalism”, the more common term for something that is “shared by all people or things in the world or in a particular group” is “universality”. But, in either case, the crucial defining component of something that is “universal” is that it is shared by all. It cannot therefore be progressive, which implies that – at least for some time – it will only be shared by some. “Progressive universality” is a bit like talking about “partial infinity”, “the larger half”, “slightly unique” or “nearly whole”. There is a danger that advocates of such “progressive universality” (as it should be) in social protection do not actually want to “progress” at all: they want to continue with their minimalist poverty-targeted approaches, while paying token lip-service to the concept of “universality” that they have in fact signed up to.

The idiot savants who practice such verbal dexterity are clearly confused, so, before this gets us into another fine mess, we should all agree to stand down from the use of oxymorons in social protection.

Happy New Year…and let’s universally resolve not to make that oxymoronic for those in need of effective social protection!

Social Protection through the Looking Glass: Lewis Carroll’s parable for the unwary

The original version of this blog appeared on Development Pathways

What can a 19th Century work of literary nonsense teach us about global social protection debates? To mark April Fools’ Day, I would suggest that Lewis Carroll’s work The Walrus and the Carpenter can tell us more more about prevailing dogmas in the sector than you might imagine!

Lewis Carroll (aka Charles Lutwidge Dodgson) was a master of the art of literary nonsense. His major works include Alice in Wonderland and its sequel, Through the Looking Glass. One of the highlights of the latter work is a splendid poem, recounted to Alice by the tubby twins Tweedledum and Tweedledee, called The Walrus and the Carpenter. The poem tells the story of the two eponymous characters walking along a beach, finding a bed of oysters and persuading the younger oysters to follow them. It ends with the Walrus and the Carpenter eating all the oysters!

Critics have struggled to understand the deeper meaning of the poem ever since it was published in 1871. Many explanations have been offered. Some have suggested that the Carpenter is a caricature of Jesus Christ and the Walrus a caricature of Peter (or Buddha in another version), with the oysters as their disciples. Others have argued that the narrative is a critique of colonialisation, with the two protagonists representing the Empire and the oysters its colonies. Even J.B. Priestley has weighed into the debate, suggesting that the Walrus and the Carpenter were instead archetypes of two different types of British politician.

But I would like to suggest a new thesis: that it is an allegory of today’s social protection debates. On this basis, the Walrus and the Carpenter are the World Bank and the IMF respectively, the beach signifies the problem of global poverty, and the oysters represent national initiatives towards inclusive social protection. Let’s look at this in detail through some key verses. After three stanzas of scene-setting, we are introduced to the main characters:

“The Walrus and the Carpenter
Were walking close at hand;
They wept like anything to see
Such quantities of sand:
If this were only cleared away,’
They said, it would be grand!”

Here we see the two institutions surveying the extent of the problem of global poverty and wishing that it could be reduced. Presumably the Walrus has been used to denote the World Bank because of the consonance between their initial syllables; the Carpenter (i.e. a wood-worker) is clearly linked to the fact that the IMF was created at Bretton Woods (and the two organisations indeed continue to be known as the Bretton Woods Institutions).

Next, having expressed their desire to reduce poverty, we come to a crucial stanza where they opine how this might be achieved:

“If seven maids with seven mops
Swept it for half a year,
Do you suppose,’ the Walrus said,
That they could get it clear?’
I doubt it,’ said the Carpenter,
And shed a bitter tear.”

Immediately, the two institutions present a possible – but in reality, totally inappropriate – social protection solution to reducing the extent of global poverty. Interestingly, their default reaction, just as it is today, is towards a public works approach. And, as in many modern-day instances (think Ethiopia, Bangladesh, Zimbabwe), the proposed works are far from productive: using unsuitable tools (in this case mops) to sweep sand on a beach. Even more damaging (and again as is often the case today), they propose that it should be women who undertake this back-breaking work, thereby adding to their domestic burdens, and jeopardising the health and education of their children. The significance of the number of maids – seven – is presumably a reference to the seven key features of the blueprint World Bank approach to social protection, involving as it does a mix of: (i) poverty-targeting, (ii) an anti-social registry, (iii) proxy means testing, (iv) conditionality, (v) public works (vi) graduation, and (vii) an exit strategy.

“O Oysters, come and walk with us!’
The Walrus did beseech.
A pleasant walk, a pleasant talk,
Along the briny beach:
We cannot do with more than four,
To give a hand to each.”

In this next verse, the World Bank issues its enticing lure to the “oysters”, in other words to developing country governments wanting to invest in social protection: accept our package, and in exchange there will be cheap loans a-plenty and we will be there to lend a hand to each of you in designing your social protection system (in just the fashion we want it)!

“The eldest Oyster looked at him,
But never a word he said:
The eldest Oyster winked his eye,
And shook his heavy head —
Meaning to say he did not choose
To leave the oyster-bed.”

In this, my favourite stanza, the wise old oyster resists the siren call of the Bretton Woods package. He knows that, given time, the nascent national solution focused on inclusive lifecycle schemes is a better option: it will generate popular appeal, political energy and fiscal space, and it might – like an oyster – even create a domestic pearl that will endure for the long haul. Think of these prudent sages as countries such as Lesotho, Nepal, Mongolia.

“But four young Oysters hurried up,
All eager for the treat:
Their coats were brushed, their faces washed,
Their shoes were clean and neat —
And this was odd, because, you know,
They hadn’t any feet.

Four other Oysters followed them,
And yet another four;
And thick and fast they came at last,
And more, and more, and more —
All hopping through the frothy waves,
And scrambling to the shore.”

In contrast to the wise old sages, we see in these next two verses that many countries cannot resist the temptation of the Bretton Woods package: think Malawi, Liberia, Mali, Zimbabwe in Africa and Indonesia, Pakistan, Bangladesh and the Philippines in Asia (since they should come in groups of four). They are “all eager for the treat”, and have no idea what is in store for them…

These ingenues unwittingly walk a mile along the beach with the predators, and sit down on a “rock, conveniently low”.

“The time has come,’ the Walrus said,
To talk of many things:
Of loans — and shocks — and safety nets —
Of conditions — and of strings —
Why PMT is worth a shot —
And whether pigs have wings.”

Okay, I admit that I have made some minor adaptations to this particular verse, to contextualise it and bring it up to date. The original is concerned with typically nineteenth-century social issues, “of shoes – and ships – and sealing wax – of cabbages – and kings”. But, whilst the overall attitude of the Bretton Woods Institutions remains firmly embedded in the nineteenth-century worldview of poor relief and workfare, the terms of the debate have inevitably evolved over time. So I have tried to reflect some of the contemporary obsessions of the World Bank in today’s social protection debate, while remaining true to the spirit of the Carrollian original.

The protagonists duly have their “chat”; then, a few stanzas later, we move to the grisly denouement:

“I weep for you,’ the Walrus said:
I deeply sympathise.’
With sobs and tears he sorted out
Those of the largest size,
Holding his pocket-handkerchief
Before his streaming eyes.

O Oysters,’ said the Carpenter,
You’ve had a pleasant run!
Shall we be trotting home again?’
But answer came there none —
And this was scarcely odd, because
They’d eaten every one.”

So, as the moral of this disturbing fable for today’s social protection debates, I borrow the warning from another presumed characterisation of the World Bank and the IMF in Through the Looking Glass: Beware the Jabberwock, my son, … and shun the frumious Bandersnatch! After their talk, the hypocritical Walrus sorts the oysters by size and devours them, all the while crying crocodile tears (to mix my animal metaphors!). At the end of the process, the only survivors are the World Bank and the IMF themselves, and no sustainable national social protection systems remain for those countries who chose to follow their advice: just like in real life!