Is Giving Money Directly to the Poor a Good Idea?

GiveDirectly co-founder on the value of charitable cash transfers.

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Is Giving Money Directly to the Poor a Good Idea?

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"No one person has the same goal or aspiration," says Paul Niehaus, President and Co-founder of GiveDirectly, "And what you get when you give people money and let them use it is this real rich human experience where everyone does something a bit different."

GiveDirectly is changing the way people think about charity. The non-profit was founded in 2008 and is designed to help people living in extreme poverty through cash transfers via mobile phones. The recipients use their mobile phones to receive the money, which they are allowed to spend as they wish. This philosophy varies greatly from traditional third party charities which largely decide how a recipient should spend the money.

"Something important happened in development around 2000, which is we decided to scientific experimental testing," explains Niehaus. "When you start doing science, when you put two things head-to-head and ask 'what's the impact?' there are surprises. Cash transfer, which is literally just giving money to poor people, has turned out to be one of those really big positive surprises."

About 8 minutes.

Produced by Amanda Winkler and Anthony L. Fisher. Camera by Jim Epstein and Brett Crudgington.

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Comments

[Fist of Etiquette]

I give my charitable contributions directly to the Clinton Foundation. That way I get the greatest bang for my buck.

[Scruffy Nerfherder]

That way I get the greatest filthiest bang for my buck.

[np]

Top donors get BJs from Hillary

[Almanian!]

You're gonna need a bigger bucket for everyone who just threw up in their mouths

[AlmightyJB]

Just don't call her Monica at any time during.

[Agammamon]

That way I get the greatest filthiest bang for my buck.

Same thing.

[Almanian!]

I just throw my money directly in a bonfire. Same thing.

[cluskillz]

It's only the same thing if the bonfire is strategically located within a nuclear power plant.

[Pan Zagloba]

How many kilotons do you expect for your buck?

[See Double You]

That way I get the greatest bang for my buck.

Clinton was pretty fond of bombing people, so you might be onto something.

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[Fist of Etiquette]

"Everybody's very different. No one person has the same goal or aspiration..."

I think the central planners among us will recognize this isn't true.

[RagingSparrow]

I hope you are being sarcastic, but I'll play.

Central planners have a poor track record of succeeding in their efforts. People don't want the government telling them what they can do (within reason.) Treating welfare recipients as children is a poor way of pushing them into adult jobs. Treat them like adults, and you should get a better response as several studies have shown.

Yes, different people have different needs and aspirations.

[VG Zaytsev]

Central planners have a poor track record of succeeding in their efforts.

Not true.

Central planning works out pretty good for the planners. They get a higher station in society, with all the attendant perqs, than they ever could via voluntary exchange. The planned - not so much.

Which begs the question of who the planning is really for and why we just assume that the desire to do so is motivated by altruism and not self interest.

[Agammamon]

Central planners have a poor track record of succeeding in their efforts.

But, amazingly enough, people have an even poorer track record in realizing this.

So it all cancels out.

[Chinny Chin Chin]

Welcome to Reason. Learn to trust your sarcasm meter.

[Brett L]

If we are going to give money to people via government transfer payments -- poor or not -- then we should just send them a check to do with as they will. The underlying assumption, that it will be spent "wrongly" is a canard. Granted, many people stay poor because they don't allocate the money they have in the way most likely to increase their net worth. So what? Cash payments minimize overhead and that's all you can really hope for.

[Almanian!]

is a canard.

And a "canard" is French for.......DUCK. so I must ask,

Who are you, who is so wise in the ways of scie....social science?

[Dweebston]

Precisely. Local governments won't be any better at picking economic successes than ours. They will, however, be better-equipped to quash or expropriate budding entrepreneurs using the lucre supplied by Western governments

[Chinny Chin Chin]

Agreed. A direct transfer system could also help do away with the alphabet soup of federal agencies. Rather than 7500 programs devoted to "solving" particular issues, just send folks a single check.

[Hamster of Doom]

Plan of the Day material, that is.

Fire thousands of social workers and administrative bureaucrats, and use the savings on their salaries, luxe benefits and pensions to fund it.

[Dweebston]

But if you give money directly to filthy farmers, they'll just buy gross goats or chickens or whatever. If you give money to charities, they'll buy a nifty solar-powered water filtration system for the whole filthy farmer village.

[RealCrankyYankee]

Or, they'll build themselves a nice condo with a pool and build a big fence to keep the homeless, starving refugees out. For a really look at some really shameful abuses of charity funds, see this week's Vice story on Haiti charities. Billions of dollars were donated after the earthquake (2009 or 2010?) and most of the affected are still living in refugee camps.

[Jim Smithy]

Any one or charity in need of giving away money, let me know. I will happily accept it.

[The Late P Brooks]

If I'm going to give, I'll give directly.
That way, I know I'm not supporting a bunch of parasites.

[buybuydandavis]

"Cash transfer, which is literally just giving money to poor people, has turned out to be one of those really big positive surprises."

Big surprise? Not to Uncle Milty.

The 4 Ways to Spend Money.
https://www.youtube.com/watch?v=5RDMdc5r5z8

1. You spend your own money on yourself.
2. You spend your own money on someone else.
3. You spend someone else's money on yourself.
4. You spend someone else's money on someone else.

Case 1. aligns power with incentives, and gets the best result. Duh.

It's pretty obvious to anyone actually concerned with helping the poor, instead of siphoning off money from the non poor for the supposed benefit of the poor.

[dan'o]

Fucking nearly drives me into a homicidal rage that politicians (ALL CASE 4) see them selves, and are largely seen as charitable. Uncle Joe giving $360 annually to charities is a fine example.

[Tak Kak]

I haven't listened yet, so maybe this is mentioned, But I thought the failure of Muhammad Yunus' microcredit system pretty much showed that even when the poor get the money it doesn't help much. (Those scenarios are slightly different, of course) The lesson being poor people simply can't be helped... or something.

[LynchPin1477]

It's nice to think that the only thing poor people lack is resources, or in this case the money to buy resources. Just give them the resources and they'll work hard to improve their life, and then they won't be poor!

That might work in some cases, but I think usually it will fail. Not because poor people are defective in some way, or lazy, or not interested in bettering themselves, but because the problems faced by the world's most impoverished people tend to extend way beyond a lack of resources, education, etc.

Most of the poor are farmers, but sometimes the places that the poorest live just aren't very well suited to agriculture. Maybe with a first-world level of investment in technology and farming practices those places could be made productive, but that is beyond what most cash transfers can offer.

Sometimes the places that the poorest live have such poor infrastructure, or are so war torn, that it's really difficult for a hardworking and successful person to realize the fruits of their labor.

And that's really the issue: poverty is usually more than just an individual circumstance. Rather, it is often at least partly the result of larger systemic issues that a simple cash transfer won't solve.

If you teach a man to fish, but there are no fish in the lake, or a warlord steals them all, he'll still go hungry.

[dan'o]

My family is involved with a Catholic Vietnamese order that any of us would give a nod to. The bishop who started it up was a real capitalist and all of their projects are (I dislike using this term) self sustaining. For example:
The order purchases a dozen piglets, pays for their veterinarian shots and buys feed. Finding a suitable family (their religion is not a factor,) they train the mother to care for the pigs. Mom does all the work from there. Once she take the pigs to the market for slaughter, the family returns 100% of the seed money to the organization and keep the rest. The average family more than doubles their income (dad keeps his job during this process.) The order then has the funds to do it again for someone else. They're even careful to spread out the practice to avoid disrupting the pork market.
Potable water is another major issue there. They build the initial well (there are about 20 in various provinces,) with donated funds, but sell the water at a price that covers maintenance and operations cost.

[dan'o]

The culture behind charity is pretty different there. Its customary to exchange gifts, which is a regular practice at their healthcare clinics. Patients receive either eastern or western medicine, but always give something in return. Whether its a chicken or a couple bucks, they give something to say thanks. To deny them the ability to do something in return would be to dishonor them. Wish we had some of that brewing in the bottom quin-tile here in 'Murica rather than "fuck you i deserve this shit!"

[Sevo]

"It's nice to think that the only thing poor people lack is resources, or in this case the money to buy resources. Just give them the resources and they'll work hard to improve their life, and then they won't be poor!
That might work in some cases, but I think usually it will fail. Not because poor people are defective in some way, or lazy, or not interested in bettering themselves, but because the problems faced by the world's most impoverished people tend to extend way beyond a lack of resources, education, etc."

Avoiding some detail and admitting anecdotal data, I am by now personally acquainted with many (50? 75?) attempts to help 'poor' individuals and families via direct aid, either in cash or material assistance. Success is rare.
It seems some people are poor because they really have bad decision-making skills and direct payments or assistance seems to 'disappear' rapidly with no improvement in the well-being of the recipients. To refer to the four ways of spending money above, most often the assistance is seen as #3.
We are now trying some new strategies to require the recipients to 'have some skin in the game'; to take 'ownership' of the aid and thereby to understand the risk of losing it. In short, to move the assistance to the #1 quad. So far, we've got mixed results.

[Chumby]

Sevo

Amsoc thanks you for paying your taxes. He'd prefer if you sunset the initiative to push for results of your charity.

[VG Zaytsev]

The word 'the poor' is overly broad.

There is a small fraction of the population that is simply incapable of helping themselves due to physical or mental handicaps. Aid to those people is simple life sustaining with no real hope that they will ever become self sufficient.

Then there is a large fraction of people that are capable of self sufficiency but are just lazy or don't give a fuck. No amount of aid will change the behavior of most of these people.

Then there is a larger fraction of people that fall into poverty for a short period time due to some misfortune, who either extract themselves from poverty with the help of family and friends or suffer further misfortune and fall into category 1.

[muskegonlibertarian]

This is similar to the concept of the "basic income" where everyone is given a certain amount of money each month sufficient for their survival. Rather similar to the idea of Social Security. Since such a system can be completely automated, the cost would likely be lower than today's welfare systems. Charles Murray in his book "In Our Hands" goes into detail as how this would work.

[Anarcissie]

Negative income tax. If the government or a charity is going to deal with poor people at all, it would certainly be cheaper and more efficient to just give them the money than to construct a huge regulatory bureaucracy. For this reason, it won't be done.

[steivesmith]

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[AD-RtR/OS!]

Give a man a fish, and feed him for a day.
Teach a man to fish, and feed him for a lifetime.
If a man refuses to learn to fish, let him suffer his own consequences.

[Win Bear]

Ah, but a lot of foreign policy is based on a third approach:

"Give a man a fish, then shoot him, and you feed him for a lifetime."

[uunderstand]

Give a man a fish, feed him for a day.
Teach a man to fish, he won't show up for work Friday.

[AlmightyJB]

Ron Swanson version:

http://41.media.tumblr.com/tum.....1_1280.jpg

[Chumby]

Just give them directions to the nearest west Baltimore CVS.

[mageekimi]

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[xemafin]

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[GregMax]

"Something important happened in development around 2000, which is we decided to scientific experimental testing," explains Niehaus. "When you start doing science, when you put two things head-to-head and ask 'what's the impact?' there are surprises. Cash transfer, which is literally just giving money to poor people, has turned out to be one of those really big positive surprises."

This has to be one of the STUPIDEST statements I've read in a long while. From beginning to end it's just complete idiocy.
"scientific experimental testing" - huh?
"When you start doing science . . ." You don't DO science. You analyze using the scientific method.
"Cash transfer, which is LITERALLY just giving money to the poor . . . " Cash transfer pretty much covers it. How can it be surprising that cutting out the middlemen saves money?
How do you trust anyone who spews such brainless twaddle?

[Limpee Wiltstock]

I'm doing science right now.

[Hamster of Doom]

With both hands.

[Crackers Boy]

"...people living in extreme poverty through cash transfers via mobile phones".

I am thinking the author has a different definition of "extreme poverty" than I do. Mine doesn't include having a mobile phone.

CB

[sudon't]

That would be extreme. Yes, even very poor people have telephones. In many parts of the World, cell phone is the only option, as there are no land lines. A telephone is not a luxury.

[GregMax]

That's ridiculous. People do NOT need phones to live. How did people live in 3rd world countries without cell phones? I guarantee you they didn't all live in poverty or destitution. What a stupid comment.

[dudemeister]

speaking as someone who grew up in a third world country, most people try to get a cell phone if they can simply because life is impossible without them. these are the shittiest cheapest cell phones you can imagine, but they allow some amount of calling and texting.

[Hamster of Doom]

And a fair portion of American homeless people, hitchhikers, travelers, train hoppers and the like also have cell phones. Usually the cheap kind, and they spange up the $30 each month to keep it on, or family back home pays the bill so they'll have a way to reach them. Others have smart phones, relics of swanker days, which can't be used as phones because they can't afford service, but are still quite adequate tiny laptops when near free wifi, and have the ability to dial 911.

[Dweebston]

Yep. As someone who used to use Walmart Trakfones, I can attest. ~$30 to buy the cheap sliding type with double minutes, and ~$15/mo. in minutes cards.

[mediwafiw]

roomate's mom makes $61 /hour on the computer . She has been out of a job for nine months but last month her check was $13778 just working on the computer for a few hours
This is wha- I do...... ?????? http://www.netjob80.com

[toxapirax]

my roomate's half-sister makes $71 /hr on the computer . She has been laid off for 5 months but last month her pay was $17321 just working on the computer for a few hours
...... ?????? http://www.netjob80.com

[Dark Lord of the Cis]

First off, the orphan/interns responsible for this need to be flogged. Second

" designed to help people living in extreme poverty"

'recipients use their mobile phones to receive the money,"

Wait, wut?

[Agammamon]

Is Giving Money Directly to the Poor a Good Idea?

Probably not.

But its a damn sight better idea than giving money to an NGO who then gives it to a corrupt government.

[OldMexican]

Man, all these opportunities to achieve some extra income by working from home! To what do we owe this generosity?