Answer to Question #129664 in Macroeconomics for ole

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

I do not agree with the statement. There exist research evidence indicating the positive effects of cash transfers. Cash transfers has positive correlation with improvement in monetary poverty alleviation. Foster–Greer–Thorbecke (FGT) indices such as poverty gap have also been shown to reduce. This is brought about by an increase in expenditure by households. Health metrics such as an improvement in nutrition and diet has been linked with introduction of cash transfers.

A report by the World Helath Organization shows a need to change from in-kind donations. Countries such as Nepal and Somalia have been receiving donations in terms of food. The report indicates that cash transfers have been associated with alleviation of poverty.

The links below lead to the reports indicating the positive effects of cash transfers.

https://www.odi.org/sites/odi.org.uk/files/resource-documents/10749.pdf

https://www.who.int/alliance-hpsr/alliancehpsr_dfidevidencepaper.pdf