In 2013 Daniel Handel, an economist with USAID—the U.S. government’s main agency for foreign assistance—had just moved to Rwanda when he heard about a charity that was testing a bold idea:
Instead of giving people in poor countries, say, livestock or job training to help improve their standard of living, why not just give them cash and let them decide how best to spend it?
Handel had been mulling this exact question. Aid programs were spending enormous sums per person to boost poor people’s income less than the cost of the program. At this rate, Handel thought, why not just hand over the money to people directly? This program called GiveDirectly was doing just that.
So Handel went to his bosses at USAID’s Rwanda office and proposed an experiment:
Take one of USAID’s typical programs and test it against cash aid. For the comparison, he selected a program to improve child and maternal health in Rwanda by teaching families about nutrition and hygiene.
A pool of families from nearly 250 villages was selected based on typical criteria and randomly assigned to one of four groups.
- Those in the first were the “control” and received no help.
- Those in the second group were visited by the nutrition and hygiene education teams.
- Families in the third group were given small cash grants by GiveDirectly equivalent to the per-person cost of the nutrition and hygiene program, an average of $114.
- In the final group, families got a much larger cash grant of around $500 – a figure chosen because this was the amount that GiveDirectly estimated was more likely to make an impact.
Following the experiment, the government released the results of the first study in the series.
The experiment found that the program met none of its main objectives. Teaching Rwandans about nutrition did not improve their nutrition or health. Neither did giving Rwandans the cash equivalent of the cost of the education program — about $114.
“Our hearts sank.”
The program’s focus on trying to change behaviors is one of the world’s major strategies for ending malnutrition. And, at least in this example, it had failed to achieve any of its primary goals.
A year on, the children who had been targeted by the nutrition and hygiene program were no more likely to eat a better or more diverse diet, and no less likely to be malnourished or anemic than children who had gotten no help at all. But providing a much larger cash grant of about $500 did make some difference.
Supporters of such “cash-benchmarking” exercises are heralding this particular one as a milestone. For years, anti-poverty advocates and researchers have complained that the U.S. government doesn’t do enough to make sure its aid programs actually work. “But when you talk about giving money to people straight up, with no conditions, people at USAID look at you kind of like you’re a crazy person. There’s ‘an inherent sense’ that they can’t be trusted to spend it wisely.” said Daniel Handel’s associate James Carbonell.
- In this case, people who were given the cost-equivalent grants used much of the money to pay down their debts.
- It remains unclear what, if any, material changes USAID is planning to its nutrition efforts based on the study’s findings.
- At the time of this writing (FEB 2019), USAID remains reluctant to discuss the experiment and did not grant the authors of the NPR story permission to speak directly to Daniel Handel about the results.
Discussion
- Did the authors of the study Fail?
- Would proving that cash-equivalent grants were as beneficial as the education program have qualified as Success?
- Or did the authors succeed by proving that simply handing recipients money without any stipulation was the wrong way to achieve a particular goal?
- Could the authors conclude that poor people really DON’T know “what to do with the money”?
Credits
Heavily edited from an original story by NPR.
Copyright 2018 NPR. To see more, visit http://www.npr.org/.
Link to the original:
https://whyy.org/npr_story_post/which-foreign-aid-programs-work-the-u-s-runs-a-test-but-wont-talk-about-it/
Further Reading
The Planet Money story: https://www.npr.org/templates/transcript/transcript.php?storyId=214210692
From Nonprofit Chronicles: https://nonprofitchronicles.com/2018/09/11/why-is-the-us-giving-cash-to-poor-people-in-africa-no-strings-attached-for-good-reason/
Brief Exercise
- In the Reply field below, briefly answer any or all of the Discussion Questions, then discuss how you would respond to finding that your “My Hypothesis” proposal cannot be supported by the initial evidence.
- (Assume in your Reply that you did not wait until the last week of the semester to discover that the evidence did not support your Hypothesis. 🙂 )
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Counterintuitive Fall 2022 
The authors of the study did not fail, yet succeeded in making a different discovery. It is a success to know that these nutrition and hygiene programs do not work, allowing money to be spent elsewhere for a more beneficial investment. People do know what to do with the money, as they said they paid off their debts with it, and should follow through with that information. Doing another study on the effects of giving the money directly would help draw a clearer conclusion.
I’m impressed and gratified that you responded to this exercise, BV. We agree that studies that yield discoveries of any kind do not fail, they succeed in ways that might not have been predictable.
The researchers on the study did not fail. Although they couldn’t prove giving resources such as nutritionist made much of a difference, they did notice that the cash did do something. The $500 cash grant made a small difference. Being able to prove that the cash grants made a difference would still be considered success even though the nutrition education had failed. This proved that sending resource such as doctors and nutritional things over would not change the long term outcome of the health and life style. Even sending money would not generate a big enough change. The authors could Not conclude that poor people don’t know what to do with money. In order to prove this they would need to conduct more test to get a broader range of subjects and see what a majority would do with the money.
If I found my hypothesis could not be supported by the initial evidence I gathered, I would make a new conclusion that could be interpreted by the research I found.
Sometimes the value of a study is to point the way to the next, more precise, more carefully-planned study. Maybe there’s a magical proportion of money and education that would dramatically improve childhood nutrition.
The researchers of the study did not fail their study. While the objectives of their study were not met, and their expectations were disproven, it provided insight nonetheless, which should be the overall aim for studies. The researchers found answers, therefore they succeeded. In the same sense, if the researchers proven that the cash-equivalent grants provided as much support as their nutrition program counterparts, that would’ve also been a success. Finding results that correlate with your hypothesis can always be viewed as a success. I do not believe that the authors can accurately conclude that poor people do not know what to do with money as the results were not very conclusive. They did get a lead, which was the fact that the 500 dollars did make a small impact. This can lead them to focusing more on cash grants and the relationship between the value and the impact on people’s health. If another study was conducted around this, the truth will reveal itself ever slightly more.
Beautifully said, Anonymous. Science and academics advance slowly step by step. Maybe the best way to speed up the process is to test something radical, as this “researcher” did.
This experiment reminds me of earlier examples in the course back when we were composing our first hypothesis, and how we stressed that when we go to research we may not find what we expected to find. If the goal were simply to improve people’s nutrition, then yes, the experiment did fail. However, what it proved instead is arguably far more significant for the larger goal at the root of this smaller, dietary goal. The experiment didn’t prove that people didn’t know what to do with their money, but that the people running the experiment didn’t know what was the most immediate need of the people they granted money to. Making bad dietary choices may lead to a shorter life and worse wellbeing over time, but that pales in comparison to bankruptcy. The group which received the $500 absolutely knew what they needed to spend it on the most: their debt. What this ultimately suggests is that you cannot succeed in encouraging better nutrition for the impoverished if you do not first address the root of the threats they face to their financial security.