I heard another story about this line of research that's been going around for a long time - that the data shows in multiple studies that the easiest and most effective way to assist the poor is just to give them money, no strings attached. From NPR:
The researchers identified about 65,000 households across an impoverished, rural area of Kenya and then randomly assigned them to various groups: those who got no help from GiveDirectly and a "treatment group" of about 10,500 families who got a one-time cash grant of about $1,000.
"That's a really big income transfer," notes Miguel.
"About three-quarters of the income of the [recipient] households for a
year on average." It also represented a flood of cash into the wider
communities where they lived. "The cash transfers were something like
17% of total local income — local GDP," says Miguel.
Eighteen months on, the researchers found that, as expected, the families who got the money used it to buy lots more food and other essentials.
But that was just the beginning.
"That money goes to local businesses," says Miguel. "They sell more. They generate more revenue. And then eventually that gets passed on into labor earnings for their workers."
The net effect: Every dollar in cash aid increased total economic activity in the area by $2.60.
But were those income gains simply washed out by a corresponding rise in inflation?
"We actually find there's a little bit of price inflation, but it's really small," says Miguel. "It's much less than 1%."
The study — recently unveiled at a conference of the National Bureau of Economic Research and soon to be available on its website — also uncovered some evidence for why prices didn't go up: A lot of local businesses reported that before the cash infusion they weren't that busy.
"They may be a shopkeeper that doesn't really have that many customers [because] it's a poor area. They may be someone working at a grain mill that only has one or two customers an hour."
So when they suddenly get more
customers, they don't have to take extra steps like hiring more workers
that would drive up their costs — and their prices. In economic
parlance, there was enough "slack" in the local economy to absorb the
injection of cash.
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Read more:
https://www.npr.org/sections/goatsandsoda/2019/12/02/781152563/researchers-find-a-remarkable-ripple-effect-when-you-give-cash-to-poor-families
https://www.oecd.org/dev/pgd/46240619.pdf
https://www.rienner.com/uploads/553a9642e0c0a.pdf
