Ep. 18: The promise of conditional cash transfers

AEA Research Highlights

Simply giving cash with a few strings attached could be one of the most promising ways to reduce poverty and insecurity in the developing world. Today, over 63 countries have at least one such program.

And while these policies have been around for a few decades, little is known about how much so-called conditional cash transfers (CCT) improve people's lives over the long term.

A paper in the November issue of the American Economic Journal: Economic Policy fills that gap by studying Indonesia’s conditional cash transfer program over a six year period.

Authors Nur Cahyadi, Rema Hanna, Benjamin Olken, Rizal Adi Prima, Elan Satriawan, Ekki Syamsulhakim found that the Family Hope Program dramatically boosted school enrollment rates and the use of healthcare facilities.

But most importantly, they found signs that families permanently benefited from the extra support. Significantly fewer kids suffered from stunted growth when their parents got cash—an outcome that requires continuous investment throughout childhood.

Hanna recently spoke with the AEA’s Tyler Smith about the effectiveness of conditional cash transfers, the risks of making conditions too strict, and what program designers should keep foremost in mind.