The Surprising Impact of Cash Transfers on Child Mortality Rates

While providing cash aid to needy families shows promise, its efficiency as a life-saving means is debatable.

The debate on universal basic income seems to be perpetual. My initial article in Vox discussing government-backed guaranteed income dates back to a simpler time, during Obama's presidency. Since then, topics like Andrew Yang's political campaign, pandemic relief checks, and advances in artificial intelligence have reignited interest in this concept.

Mixed Outcomes: The US Experience vs. Global Potential

Studies in the United States that examined the impacts of non-restricted monetary grants during the pandemic reported inconclusive results. These monetary distributions showed no definitive positive influences on health, well-being, or financial confidence in surveyed Americans.

Contrasting this, more substantial studies examined cash transfers elsewhere. The 'Baby’s First Years' initiative, starting in 2018, allocated $4,000 per year to underprivileged American households. However, it noted no significant differences in child behavioral or developmental progress. Another project by OpenResearch, handing out $12,000 annually for three years, noticed minimal positive indicators primarily due to resultant increased spending but countered by reduced work hours.

In 2017, I wrote about how basic income's major success is observed outside the US. A recent study from GiveDirectly in Kenya supports this notion by correlating cash grants with both poverty alleviation and life preservation there.

Kenya Study: A Dramatic Drop in Child Mortality

This recent analysis elaborates on how transferring around $1,871 to more than 10,500 homes in rural Kenyan settings led to decreased child deaths. Given the affordability of goods in Kenya, these funds represented more value than the stated amount in American terms.

The intervention being notably larger than Kenya's ongoing monthly aid of about $45, reduced mortality by an impressive 48% shortly post-distribution between 2015 and 2017. The unprecedented nature of results demands cautious optimism.

Deciphering the Underlying Mechanisms

What drove this improvement? Although not decisively answered, the study hints at possible reasons. Increased hospital births were observed among aided mothers, potentially safer than home births in Kenya. Still, it's unlikely that hospital births solely account for the improvement.

Additional factors such as enhanced nutritional intake indicated by improved food security could attribute to better survival rates. Mothers who received cash also took more leave around childbirth, paralleling a type of paid parental leave—an aspect not mirrored among fathers.

The Caveat of Cost-Effectiveness

Despite the positive impacts on mortality rates, the economic efficiency of the cash program remains questionable. At approximately $25.75 million for the intervention saving 86 lives, the expense per life saved peaks at $299,418. While this compares favorably to some high-income nations' benchmarks, like Medicaid's $5.4 million per life, it's less impressive against more economical life-saving methods in regions like Kenya.

Organizations like GiveWell, which financially backed the study, recognize most cash benefits derive from poverty reduction rather than life-saving.

Balanced Conclusions

It’s misguided to think cash aid is a stand-alone solution in life-saving missions within developing nations. As pointed out by Dr. Miriam Laker-Oketta, effective infrastructure and healthcare facilities bolster cash program success. Conversely, dismissing cash’s potential entirely is premature, especially concerning impoverished populations where it can marginally improve health outcomes.

As common in media reporting, stories highlighting successful cash interventions often eclipse those demonstrating limitations, despite the latter contributing crucial understanding for policy-making.