Lessons for cash transfer designers

Blog by Master students in Public and Global Health Programme: Marjaana Viita-aho, Ida Helotie, Wafa Alimam, and Yuanyuan Wang

Cash transfers are increasingly adopted by low-and middle-income countries as a key approach to poverty reduction and social protection. There are two ways of transferring cash, either under conditions or not. The primary objective of conditional cash transfers (CCTs) is to alleviate poverty by giving money to poor people in return for fulfilling specific behavioral conditions. Whereas unconditional cash transfers (UCTs) do not require any conditions on the part of recipients (Bastagali et al, 2016). The question of whether to condition or not to condition is still debatable among experts. Arguments behind the debate usually follow ideological positioning rather than sound theories. More interestingly, an objective and systematic comparison between the two was rarely made although lots of programs have been conducted around the world. Hence, there are still sizable gaps in our knowledge about the distinctive impact of different cash transfer programs

Conditional cash transfers (CCTs) originated in Latin America, and now they are among the most evaluated social programs, vary in many ways but has one consistent feature that these programs are primarily targeted towards women as women tend to be the children’s primary caregivers and are considered more likely to invest the cash in the household (Cookson, 2018). The increase in the number of cash transfer programs can be considered good news in terms of reducing the severity of female poverty and improving the education and health outcomes of women and children (Cookson, 2018). While cash transfer programs may address economic inequality, the question here is how well do these programs address gender inequality? Yet, tackling gender inequality requires more than increased access to health and education for women. CCT programs’ successes based solely on indicator that children’s attendance at school and health appointments (Cookson, 2019). As a result, it in fact ‘fixing’ responsibility for child outcomes on mothers. Women are frequently ‘over-utilized’, the program attempted to transfer the ‘feminization of poverty’ into the ‘feminization of responsibility’, or ‘feminization of survival’(Chant, 2016). Evidence from Brazil and Mexico social protection program indicator the implement of CCTs into women can provide women with more agency and autonomy, it can’t in itself empower women or address the root causes of gender inequality.

Universal basic income (UBI) and negative income tax (NIT) are examples of UCTs. They are both tax-based redistributive policies that are often considered to bring about the same redistributive outcome. However, their ideological backgrounds differ from each other and influence the ethical and economic impacts of these policies (Tondani, 2009). UBI appeals to the Finnish “passion for redistribution” (Kallio, Kangas, & Niemelä, 2013) with egalitarian ideology whereas NIT, based on libertarianism (Tondani, 2009), might be considered a better option to encourage people to work and earn a living.

In high-income countries, these policies can be used to replace the existing social protection scheme (Honkanen, 2014; Tondani, 2009) or to complement it as suggested in Finland (Kangas & Pulkka, 2016). UBI could ensure the same minimum economic opportunities for everyone to strive forward and enable more equal income distribution while NIT is more efficient in poverty reduction, since benefits would be only targeted to the most disadvantaged (Tondani, 2009). These impacts are dependent on the implementation design and details of these policies, such as eligibility, financing of the scheme and the level of minimum income guaranteed. These choices determine what is aimed to achieve with these policies.

Overall, unconditional basic income has been suggested to have potential to benefit individual and public health (Gibson et al., 2020) as well as reduce health inequities (Ruckert et al., 2018). Initial evidence from different trials around the world seems to support these ideas, although many uncertainties remain. Evidence on direct health implications from trials in high-income countries include positive effects on perceived well-being and mental health in both Finland (Tuulio-Henriksson & Simanainen, 2020) and Canada (Forget, 2013), and reductions in hospitalization rates as reported in Canada (Forget, 2013). Similarly, evidence from trials in low- and middle-income countries, including a lower incidence of illness and injury and increased spending on medical care reported in India (Davala et al., 2015), and better utilization of healthcare services due to reduced financial barriers in access to care in Namibia (Haarman et al., 2009), suggest positive effects on health. Furthermore, improvements in nutrition, particularly in children, resulted in better weight-for-age ratios and a reduction in severe malnourishment in both, India (Davala et al., 2015) and Namibia (Haarman et al., 2009). Additionally, several other effects reported in different trials have indirect positive effects on health including improvements in school attendance, continuation, and performance as seen in India and Canada (Davala et al., 2015; Forget, 2011); enhancements in living conditions in India (Davala et al., 2015); significant decrease in crime rates reported in Namibia (Haarmann et al., 2009); and increased trust in other people, society and its institutions as found in Finland (Kangas, Niemelä, & Ylikännö, 2020).

Indeed, the basic income trials have provided various positive direct and indirect effects on health while utilizing many different models of implementation, and in a variety of settings ranging from rural to urban regions and in low-, middle-, and high-income countries. Although the study designs have been as diverse and the outcomes somewhat inconsistent, one cannot ignore the potential unconditional basic income has in terms of public health, health promotion, and reduction of health inequities.


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