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Chick or cash?

Categories : Cash connects people, Cash is the first step of financial inclusion
March 17, 2017
Tags : Cash, Social cohesion, Social Inclusion, Unbanked
Unlike what Bill Gates claims, cash is much more cost-effective than poultry for poverty relief programs.
Communication Team / Equipo de Comunicación

University of Chicago Professor, Chris Blattman, launched an interesting debate in response to Bill Gates’ proposal to help world poverty. In 2016, Gates recommended giving chickens to the poor as a means to provide them with a living income. However, states Blattman, a growing number of development organisations are turning to cash for their relief programs deeming them not only more cost-effective but also more successful in bringing satisfactory returns to poor families.

Cash is more versatile than any other aid program as it also offers the receiver the independence to choose how to best invest the money in regards to family, geographic context, skills, etc. In support of this argument, “research has shown that the poor make good investment choices when given the opportunity”.

On the contrary, offering livestock or training haven’t proven to bring a suitable return on investment once the costs of launching and running these programs are taken into account. For example, a program offering poor people livestock brought $80 more a year to each household after three years, but the cost of the program per participant was $1,7000. Conversely, a one-time $150 grant to poor Ugandan women brought $202 extra income a year for a cost of only $843 per household – mostly administrative costs to run the program. That equals to $122 more per household a year with $857 less investment.

Yet “no one has run the race between chicken and cash programs” and no one uses data to hold development organisations accountable for their initiatives. Maybe the time has come to put intuition aside and use development money, such as Bill & Melinda Gates funding, to run a worldwide study to understand which programs bring the best results at lesser cost.

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