Benchmarking Development Projects to Cash

Sunday, March 10th, 2019 Marissa BlockMarch 10th, 2019 • Bookmarks: 97

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In recent years, there has been increasing evidence in support of cash transfers, both conditional and unconditional. In fact, there are organizations whose sole purpose is to give cash directly to the poor. While the evidence suggests that cash transfers can improve livelihoods, there is relatively little evidence on how transfer programs compare to more traditional interventions.

In a recent study, McIntosh and Zeitlin compared the impacts of a child nutrition intervention with the impacts of cash transfers in Rwanda. The authors utilized the idea of benchmarking to assess what would have occurred had the cost of the program been disbursed to beneficiaries directly in the form of cash by measuring impact on the same outcomes. Put simply, their study asked whether it is more effective to impact child malnutrition through direct cash transfers to beneficiaries or through a child nutrition program. With this, the authors were able to assess the relative cost-effectiveness of the traditional intervention.

The experiment had essentially two treatment groups: the traditional intervention and the cash transfers. The traditional intervention was the USAID-funded Gikuriro program, which is a multifaceted child nutrition program that includes components focused on water and sanitation, capacity building of health infrastructure that provides services to women and newborns, and a number of varied components intended to improve livelihoods, such as savings and lending communities.

The cash transfers treatment provided unconditional grants to eligible beneficiaries, which included poor households with malnourished children or expectant mothers. Transfers were sub-divided between small and large amounts. Furthermore, the researchers conducted sub-experiments to test the effectiveness of different transfer timings, namely monthly flow, lump-sum, or a choice between the two. All transfers were unconditional, meaning beneficiaries did not have to do anything to receive the transfer.

Impacts were measured on a number of primary and secondary outcomes. The primary outcomes were those which the program was intended to affect, whereas secondary outcomes were those which were not directly targeted by the interventions. The primary outcomes included household monthly consumption, dietary diversity, child and maternal anemia, measures of child growth, and the value of the household’s non-land net wealth.

The Gikuriro program yielded a significant improvement in household savings, a secondary outcome, but there were no significant effects on the primary outcomes listed above. As for the cash transfers, the small amount resulted in debt reduction and an increase in the value of productive and consumption assets, again both secondary outcomes. In contrast, the large cash transfer yielded improvements across several outcomes, both primary and secondary. This includes improvements in the health outcomes of dietary diversity and measures of child growth, which the traditional child nutrition program did not significantly impact. The difference in impact between the small and large transfer amounts is in line with the theory that small transfers may move too many outcomes by too small an amount to yield a significant impact.

The uniqueness, and main purpose, of the study was the comparison of impacts between the two treatments. Using actual expenditures, benchmarking indicated that the Gikuriro program was better at increasing savings, while cash transfers improved debt reduction and yielded a significantly higher increase in consumption and accumulation of assets. Under Gikuriro, households were part of savings and lending groups, which strongly encouraged households to save, whereas when given the choice with cash transfers, households seemed to prefer paying down debt. Since both Gikuriro and small transfers did not impact child health outcomes, neither was found to be more cost-effective than the other.

The results of the study were nuanced, depending on which outcome was of most interest to the policymaker. However, the authors argued that, in general, an intervention targeting specific outcomes may be more cost-effective than cash, while large cash transfers can yield substantial benefits across a wide variety of impacts, including those targeted by the intervention.