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$22 a Month – Is This the Best Way to Fight Poverty?

NPR has a story about a fascinating experiment that is taking place in a Kenyan village. There are 400 people living in this Kenyan village, living on less than $2 a day in mud-brick huts with no running water.

Instead of the usual types of financial aid given to such people – think food, seeds, cows, job training, or schoolbooks – an American charity, GiveDirectly, is giving every adult in the village $22 per month for the next 12 years.

Why $22? Because in Kenya $22 per person per month is the food poverty line — the amount of money it would take to afford a basic basket of food for yourself.

And why is GiveDirectly giving cash, and not the traditional “in-kind” type of donation, where the donors decide what poor people need most? Because GiveDirectly believes that poor people should decide how best to use donated funds, and has shown through rigorous, independent study that people don’t waste the money.

This coming fall, GiveDirectly wants to extend the monthly payments to every adult in 200 similar villages across Kenya, then compare them to 100 “control” villages that don’t get the cash.

Some of the world’s foremost researchers of anti-poverty strategies will be doing an independent study of the data that emerges, but it will take more than a decade to determine the impact.

Michael Fay, chairman of GiveDirectly realizes that this type of aid will not permanently lift people out of poverty. He thinks the experiment should be considered a success if it shows that just giving poor people cash is more efficient and effective than the traditional types of aid.

(To me, the experiment seems to have some overlap with the idea of Universal Basic Income, which I have written about before, and seems to be gaining more and more advocates.)

To make the story more personal, NPR looked at the impact the $22 has had on two different people in the village; in both cases, it has been life changing, but in different ways.

For one person, the $22 has enabled him to invest in money-making opportunities that have helped boost his family’s income by as much as 50% in some months. The extra charity money has also meant that he can now at least guarantee his children solid food for both lunch and dinner, something he couldn’t always do.

For a second person living in the village, the extra money has allowed him to buy the medication he needs to treat his epilepsy on a consistent basis. While that is certainly a great use of the extra cash, it seems as if what he did with the leftover cash has been just as life-changing.

He bought a sofa and two chairs.

He explained that in this village, when a guy reaches adulthood, it’s traditional for him to build himself a house on his parents’ land — a mud hut with a living area and sleeping nook. But he never had the money. It wasn’t until a year ago that his brothers built a hut for him. Even then he had no furniture. Buying that sofa set was so important he says, “so that when guests came to visit I wouldn’t be ashamed.”

His mother, Pamela, remembers the afternoon when a little white taxi with the new sofa set strapped on top pulled up to his hut. He carried in one of the armchairs and just sank into it, she says, laughing. Then, she says, he started calling over all his friends, saying “Come! Come have a seat!”

“Yes,” he agrees. “I couldn’t stop smiling.”

I can’t think of a better use of charitable aid than restoring someone’s dignity and putting a smile on their face.

I wish GiveDirectly and the villagers the best with this experiment, and I hope to keep an eye on how it progresses over the next several years.

P.S. Thank you to Nurith Aizenman at NPR for writing about such an important topic, and for Marzia for making me aware of it!

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Jim Borden

Accounting Prof. at Villanova; happily married for 30+ years; father of 3 outstanding young men; vegan; interests: fitness, creativity, education, blogging, social media.

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