What if every aid conversation did begin with “is it better than cash”?

by tribsantos

Chris Blattman points to an article in Aid Thoughts on whether there is a risk that talk about cash transfers may be dominating discourse on aid and development. While the author in Aid Thoughts is an enthusiast of transfers, he fears that an obsession with it may divert attention from good but hard to evaluate interventions, like big infrastructure projects. His conclusion is that “we should be cautious not to use cash transfers as the appropriate gold standard for every intervention. There are plenty of public-good-type interventions which are (currently) hard-to-measure but important. Whether or not aid donors and governments are any good at funding these interventions should be the starting point for the discussion”.

But what if we are being too cautious? The evidence in favor of cash transfers is building through the years. The same cannot be said of other ideas. However, the money dedicated to cash transfers is but a fraction of the whole aid money and, more importantly, a tiny part of what it could be.

There are billions of poor people in the world. We want to help them. We have two idealized options (and combinations of that): we can use the money in something we know works or we can use it on something that might work. Why would we not invest at least the great majority of our resources in the thing we do know works? Surely, innovation is important, moonshots are great, Google gives employees 20% of their time to invest in things that may not be very structured. But that is not the kind of arrangement we now have in development. What we have is comparable to Google employees working only 5% (or a more precise number, if you can provide me) to the core business. That is no way to run a business, and that’s no way to achieve any goal.

Also, it is not a zero-sum situation. We tend to think of development money as a fixed value. If we use more on transfers, we use less on other enterprises. But we should think that the current equilibrium is achieved with widespread skepticism about the effectiveness of aid. I don’t think it is necessary to draw demand and supply curves to show that in the presence of considerable uncertainty over achieving a certain goal, the amount of resources directed at achieving that goal will be much less than with much more certainty. Which means that evidence-based aid should translate to many more resources invested.

So I say, let’s keep asking “is it better than cash?”. Not because other ideas are not good. But because cash is very, very good.