Answer to Question #129487 in Economics of Enterprise for Lebo

Question

Cash transfer programmes could influence the behaviour of recipients in ways that could undermine the poverty‐alleviating effects and cost‐effectiveness of these interventions” (Black et al. 2017).
Do you agree with this statement? Motivate your answer with a discussion.

Answer 1

Cash transfer programs refer to direct transfer payments to individuals who are victims of a certain crisis which rendered such individuals desperate by disrupting their sources of income, livelihood, and economic production. 

Explanation:

            Cash transfer programmes could influence the behaviour of recipients in ways that could undermine the poverty‐alleviating effects and cost‐effectiveness of these interventions.

I agree with the statement.

              This is because the transfers are meant to cushion victims of a crisis as they try to figure out what to do next to resume to their normal livelihood. But as time passes with continued cash transfer programmes, a dependency syndrome will be created, and the victims will get comfortable with such support.

              When the victims get comfortable, then the state of poverty will continue to prevail as the people won't have anything to worry about but to depend on such support for all their needs completely. This will result in undermining the poverty‐alleviating

                Additionally, when the victims rely on cash transfer programs and not make any attempts to rebuild themselves, then the government will not be cost-effective considering that such programs should only last for a short period. The victims may also be spending on needs that may not be basic because they don't work for the money and still expects more, thus undermining the cost‐effectiveness of these interventions.