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Highlights: #169 – Paul Niehaus on whether cash transfers cause economic growth, and keeping theft to acceptable levels
Nov 10, 2023
Paul Niehaus, an expert in cash transfers and their impact on economic growth and theft levels, discusses the benefits of giving cash directly to people in need and the limitations of traditional philanthropy. He explores the concept of a multiplier effect in cash transfers and its impact on economic growth, as well as concerns and objections to Universal Basic Income (UBI). The chapter also touches on GiveDirectly's fraud case in the DRC and measures to prevent future incidents.
17:27
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Quick takeaways
- Unconditional cash transfers have shown positive returns on investment, with recipients investing in assets and achieving high return rates.
- The philanthropic world needs to establish effective feedback mechanisms and distinguish between private good problems and public good problems to improve resource allocation.
Deep dives
The Effectiveness of Unconditional Cash Transfers
Unconditional cash transfers have been extensively studied and have shown positive returns on investment. In some cases, recipients have used the money to invest in assets, resulting in high return rates, such as 20% or even up to 50%. However, it is important to recognize the complexity and diversity of people's lives, making it difficult to generalize the impact of cash transfers. Factors such as the wide range of potential spending options and the potential knock-on effects on mental health and mortality rates add to the complexity. Despite the challenges, economists value the concept of giving cash as a reference point to assess the effectiveness of other interventions, such as bed nets or deworming programs.
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