Disaster reliefGifts of cash may be best way to rebuild lives of disaster victims
Historically, the orthodox approach to helping people in humanitarian emergencies has been to give them things – food, water, hygienic supplies and so on. There’s an argument for this approach, but also a very real risk: that we give people the wrong things. And the network of contractors and subcontractors often used to administer this “in-kind” aid is sufficiently complex and opaque that we can’t really tell how we’re performing. As researchers have begun conducting rigorous experimental tests of anti-poverty strategies (“randomized controlled trials”), seeking reliable answers to the question “what works?” a consistent finding has been that simply giving money directly to individuals works quite well. Multiple studies have found that when people in need receive cash and the freedom to spend it as they choose, the results are impressive.
Last week Toby Porter, CEO of the NGO HelpAge, went to Nepal to meet with people recovering from the earthquakes that have devastated the country. He asked them an interesting question: would you rather we buy you the stuff you need, or would you rather we just give you the money?
It’s a question worth asking – and one posed not often enough.
Humanitarian orthodoxy
Historically, the orthodox approach to helping people in humanitarian emergencies has been to give them things – food, water, hygienic supplies and so on. There’s an argument for this approach, but also a very real risk: that we give people the wrong things. And the network of contractors and subcontractors often used to administer this “in-kind” aid is sufficiently complex and opaque that we can’t really tell how we’re performing.
Take the response to the last earthquake to rock a developing country, in Haiti in 2010. In the wake of that quake, governments and private donors around the world disbursed more than US$9 billion in relief and reconstruction funding. That’s a massive amount of money – about 133 percent of Haiti’s annual GDP, or more than $900 per resident at the time of the quakes. And yet we have next to no idea whether we bought the right things or what impact they had.
Media investigations have found egregious examples of misplaced spending and inefficiency, including the memorable public health campaign run to teach hand-washing to Haitians who lacked soap and running water.
But it’s hard to tell how representative these are, since, for most of the money, we simply don’t know how it was used, as shown by the Center for Global Development, an independent think tank. We can at best take it on faith that we created $900 of value for each citizen of Haiti.
One alternative would have been to simply give $900 to every Haitian. Sound farfetched? As it turns out, this actually requires less faith than many of the more traditional approaches.
Direct giving works
As researchers have begun conducting rigorous experimental tests of anti-poverty strategies (“randomized controlled trials”), seeking reliable answers to the question “what works?” a consistent finding has been that simply giving money directly to individuals works quite well.
