Poverty reduction v well-being: a cash transfer experiment from Malawi

What difference does it make to development interventions if you worry about well-being rather than income poverty? A rather neat example has just come through from some new research by Sarah Bair, Jacobus de Hoop and Berk Özler for the World Bank Poverty and Inequality team. They looked at the impact on girls’ mental health of cash transfers in Malawi (why do so many researchers work on Malawi? They must be reaching plague proportions – a researcher poll tax would probably solve the country’s problems overnight).
The researchers used a randomized control trial (no surprise there, then) involving nearly 4000 girls to compare the psychological impact of unconditional cash transfers with making them conditional on school attendance and uncovered some striking differences.
“The provision of monthly cash transfers had a strong beneficial impact on the mental health of school-age girls during the two-year intervention. Among baseline schoolgirls who were offered unconditional cash transfers, the likelihood of suffering from psychological distress was 38 percent lower than the control group, while the same figure was 17 percent if the cash transfers offers were made conditional on regular school attendance.”
The researchers concluded that the main psychological benefit stemmed from improved family income, rather than school attendance, and that making them conditional on school attendance put sufficient stress on the girls to undo a lot of the benefits. ‘When an important source of income for the family depends on the actions of the adolescent girl, it might place a heavy burden on her and to cause adverse effects on her mental health’ eroding over half the psychological benefits of the cash transfer.
Conclusion?
‘Overall, the results presented in this paper indicate that mental health among adolescent girls can substantially improve when they experience positive income shocks. However, if these income shocks are administered as part of a cash transfer intervention such as the one examined here, these mental health benefits can also be quickly eroded if sufficiently large payments are made to the parents conditional on the actions of their adolescent daughters.’
So if you focus on income poverty, conditional cash transfers offer you a double bonus – direct poverty alleviation, and greater school attendance leading to lower poverty in future generations. But if you focus on wellbeing, the equation becomes more complex. Interesting