EconTalk Michael Faye and Paul Niehaus on GiveDirectly
Dec 6, 2021
Michael Faye, President of GiveDirectly, and Paul Niehaus, Professor at UC San Diego, explore groundbreaking ideas in poverty alleviation. They advocate for cash transfers as the most effective method for helping the impoverished, emphasizing transparency and respect for recipients' choices. The duo discusses the economic impacts of these transfers on local communities, contrasting them with traditional aid models. They also delve into the inefficiencies of food aid logistics and analyze the potential of universal basic income in transforming lives post-crisis.
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Disintermediation in Aid
- GiveDirectly minimizes overhead by transferring donations directly to recipients' mobile money wallets.
- This disintermediation reduces layers of decision-making and operational costs common in traditional aid.
True Cost of Aid
- Calculating the percentage of donated money reaching recipients is complex due to layered expenses in the aid sector.
- GiveDirectly aims for 90% recipient delivery, with overhead encompassing all operational costs, not just administrative expenses.
Respecting Recipient Choices
- Treat aid recipients with respect and autonomy by letting them choose how to use the funds.
- Avoid paternalistic judgments about their needs and trust their decision-making abilities.