What Happened When Liberia Tested a Pilot Program of Unconditional Cash Transfers to the Extreme Poor?
Further evidence of the potential of unconditional basic income
I'm always on the lookout for more scientific evidence of what happens when people are provided cash incomes unconditionally. Recently I found something new, a pilot program tested in Bomi and Maryland Counties in Liberia that started in 2009 and ended in late 2014. Implemented by the Liberian Ministry of Gender and Development with support from UNICEF and funded by the EU and Japan, it was called the "Social Cash Transfer Programme (SCT)" and was aimed at the "ultra-poor" - the poorest of the poor.
A study of the final results was completed and published in 2015. What was found actually closely matches the evidence we see from basic income experiments and other cash transfer programs elsewhere. It's hard to deny real observed results of what happens when people are given cash without conditions. We can debate hypotheticals all day long, but it's actual results that speak for themselves.
So what was observed in Bomi? Did the poor spend all their money on alcohol? Did they gamble it away? Did businesses fail? Did school attendance decrease? Did overall health decline? Did cats begin living with dogs?
Summary of Results
Quantitative and qualitative results of the end-of-project evaluation showed overwhelmingly that the Social Cash Transfer Pilot Program in Bomi and Maryland Counties had a transformative effect on beneficiaries and their communities. The vast majority of respondents and discussants of all categories, including children, were convinced that the program had positive impacts in a variety of ways on beneficiary and communities. School enrollments and retention increased in beneficiary households than it did in non-beneficiary households, so also did general health conditions and health seeking behaviors. Household food security and satisfaction with the quantity and quality of meals also showed better results in intervention households than in comparison households. Intervention households also made up considerable grounds in housing improvements and the acquisition of household assets. All data sources revealed that many intervention households spent a considerable amount of their cash on housing improvements. Many more sought a long-term path to income sustainability by starting their own small businesses. The cash transfers also impacted the local communities and their economies through multiplier effects. Increased business activities were reported by community members, including shop owners, which they attributed to the infusion of the “social cash” into the local economy. Overall, communities experienced increased school enrollments, improved health status for residents, improved food security, and a drop in child hard labor — like farm work.
Thus the evidence Bomi provides is in further support of the evidence we already have. As is observed repeatedly, when cash is given to the poor, they use it as most anyone else would use it: for food, school, housing, health, savings, clothing, household items, starting businesses, etc. Without being forced, people voluntarily make decisions they feel are best for them and their families, and the results are remarkable compared to similarly poor control groups who don't receive unconditional cash.
So how much cash was involved in the Liberia SCTs?
The Cash Received in Bomi
These payouts might seem small, but they were regularly dispersed over the course of each year, and actually relatively high. How high? A one-person household got 700 Liberian dollars ($10 USD) per transfer. Each additional person resulted in an extra 350 LD ($5 USD) up to a maximum of four people. A bonus was given on top of this for each and every kid in school (unlike conditional programs where school is required to receive anything). The result was an average household amount per transfer of 1,750 LD ($25 USD).
To get an idea of the relative size of this amount, the payments were intended to bridge the gap between what the poorest had to spend, and the national average standard of living in Liberia as measured by their per capita GDP of 15,825 Liberian dollars ($211 USD).
So, relatively speaking, this is no small amount. As one comparison, it was very similar to the payments in the Namibia Basic Income Guarantee Pilot, where every Namibian under 60 got 100 Namibian dollars per month (727 LD or $9 USD) as a basic income. So the payment amounts in Namibia and Liberia were basically the same, it's just that in Namibia, it went to everyone not already covered and not just the poorest.
As another comparison, if we were to test a similar pilot program in the United States as in Bomi, it would be like bridging the gap between the poorest 8% of Detroit and the US per capita GDP of $53,000 by guaranteeing all pilot participants an income floor of around $1,000 per week, and comparing how well they did with those equally poor who weren't included in the pilot. (Note: I'm actually not the first to suggest a basic income pilot be carried out in Detroit. See: Venture Capitalist Albert Wenger.)
Essentially, in Bomi an income floor was created at the national average (for those who qualified). Try to imagine an income guarantee of that size, in essence guaranteeing you your share of the country's total productivity; basically the same share we used to have but lost when productivity decoupled from wages decades ago.
So how was all this money spent?
Surprise surprise... it was food. It was spent mostly on food. Also, other basic needs.
The Purchases in Bomi
The main categories of transfer spending were food, savings, education, clothing and healthcare. Almost every household (88%) used their transfer to purchase food, which was also the item on which recipients spent the most money. Indeed, households who purchased food with their transfer spent, on average, LD$750 on it. The next two most common expenditures were savings and education. Households that purchased these goods/services spent an average of LD$528 and LD$694 respectively. While families saved for many different reasons, reports from the field indicate that a large portion went into longer term home repairs (such as the upgrading of a roof) and small business development. Other spending categories of note include agricultural inputs and businesses. While the number of families that purchased these items was limited, those that invested, invested significantly. This suggests a commitment to small businesses and agricultural production for families ready to make that leap.
We hear over and over again that the poor just can't handle money, and that the more poor someone is, the more true this is. And yet here we have the ultra-poor in a relatively poor nation, spending the cash given to them on food, savings, education, health care, and even entrepreneurship. A whopping one third of pilot participants reported starting their own businesses. And these new businesses along with existing businesses did well, because what these transfers also created were consumers.
The clear majority of program households (65%) reported an improved economic situation over the past year... Because 93% of the transfer money was spent within Bomi County, the impact of the program was felt beyond the immediate beneficiaries. Business owners reported that they were coming to rely on SCT recipients as important customers. Seventy-five per cent of business owners noticed positive impacts on their businesses. They attributed 20-50% of their growth to the SCT program. A number of program households reported even more direct forms of spill-over effects – 19% shared money and 48% shared food. Interviews also found that program households directly supported their neighbors in times of serious healthcare needs. Those that started businesses were also able to contribute to the broader local economy by offering new and improved goods and services.
Not only did new businesses start, and old businesses thrive, but people also even used their increased incomes to directly help each other. About a fifth of the pilot participants shared their money with others, and about half of them shared the food they purchased with others. The worst outcome of the SCT arose from the transfers being targeted to the poorest instead of being universal.
What else happened?
The Effects in Bomi
While 74% of non-pilot participants experienced worsened food insecurity, 90% of those in the pilot experienced improved food security.
Pilot children were less likely to miss school, and two-thirds of them received higher grades. These results were also due to kids no longer being forced to work. (Note: Similar experimental results have been observed in Manitoba and in Gary, Indiana, rural North Carolina, and rural Iowa).
Half of pilot participants reported an improved housing situation, versus only 12% of those who weren't included in the program. And 76% reported being happy with their home, versus 17% for non-participants.
65% of those in the pilot reported being happy with their lives, while only 19% of those not in the pilot reported the same happiness.
Pilot participants were about two times more likely than non-participants to seek medical care when needed, both for themselves and their children, and both adults and children alike were also twice as likely to have improved health.
“From where I sit as a health worker, I can with no doubt say that the impact on health is there and it is great.”—Bomi County Community Health Worker
These results were not trivial. They were transformative. They were transformative to the point $5.1 million in funding from the World Bank for more cash transfers was secured for six more counties in Liberia.
We can claim that because this pilot took place in Liberia, there is nothing to learn from the results, but that would be pretending that human beings are different on a fundamental basic needs level. It would be pretending that although the poor in less developed nations are certainly likely to spend cash on food and school and small business creation and consumption, Americans are far more likely to starve in the streets while methed-out clutching brand new VR headsets.
Human behavior is human behavior. Observations made from cash transfer programs in country after country continue to report the same general results. People spend their money on food that even involves more fruits and vegetables. People spend their money on new homes and improving their homes. People invest their cash as capital to start new businesses. Students focus on school. Parents focus on kids. Communities focus on each other.
These are the effects of unconditional cash transfers. These are the effects of people being given some form of minimum income. How many times and in how many places do we need to observe these effects for us to believe they are representative of what happens when people are given money without conditions? At what point will we look back at today and wonder how we ever thought guaranteeing some form of minimum income was not a common sense idea? The sooner we reach that point the better, because the results are already in.
Basic income works.
Read the full 20-page UNICEF report in pdf format: Transformative Transfers: Evidence from Liberia's Social Cash Transfer Programme
I can't wait for them to start basic income experiments in europe an USA. They will not be able to deny the positive effects any longer. Hopefully leading to a shift in thinking
They've already started or are starting projects in Utrecht, Nederlands and Ontario, Canada.
I think also in Sweden, when I am right.
Does Sweden still exist as a country? I am sorry to say, but I fear that Europe's days as a free continent are numbered...
Thank you thank you thank you! A slap in the face to all cold hearted, non-generous, unvisionary greedy enslavers out there. You know the people who say that people would buy alc. and fuck all the time are actually the people who would do that because they think from their perspective!!
Dear Scott, thanks for upvoting my reply. Here I am talking about a basic income chain. It's a video. The responses were limited and of course it must not be exactly like that. The video:
The post containing the video:
https://steemit.com/crypto/@shla-rafia/announcement-steemit-clone-riceweed-which-forwards-25-of-all-income-to-accounts-android-and-ios-apps-equally-after-captcha-got
This is what I'd like to see Steemit eventually adopt. I think every account user should get an equal dividend as a percentage of the total. Creating a clone is certainly one way of achieving that, but thanks to network effects I'd prefer Steemit just make the change at some point by starting small with say 5% as a dividend.
Great that you talk to me. I wouldn't mind to give 25% or my work away. The network effect is in my opinion close to zero with Steemit othwerwise we would have conquered the hearts and minds of the people already.
check this out: https://steemit.com/cryptocurrency/@revo/what-can-iceland-and-cryptocurrencies-tell-us-about-a-new-monetary-system-and-a-universal-basic-income
Firstly any post with a reference to cats and dogs living together has my vote.
Secondly what a contrast between how these people used their money and the utility they extracted from it vs how a billionaire would use it.
Thirdly it kills me that I've spent a month posting on Steemit and some how made around $200 worth of Steem in that time. That would be a small fortune to people in Liberia.
Folks if you have spare cash sitting around you could loan some of it to a company like Kiva who will then loan it to folks who could really use that bit of extra spending power. You could argue it's nothing like as good as giving them the money. On the contrary some would say a loan is better because it stops them just wasting the money. However I think this study proves differently. Their needs are too great just to piss it away and they actually seem to make much smarter choices because if it.
Actually, check out givedirectly.org. They focus on unconditional cash grants in an extremely data-based way and the results are far superior to Kiva in poverty reductions and overall outcomes.
They've also already begun a 12 year experiment of universal basic income in Kenya in order to test it long-term in a way that's never been done before in history.
Thanks for the tip - I thought I had not heard of GiveDirectly.org before but I now realize they are mentioned on the Rationally Speaking podcast I listen to. I'll check them out.
I echo your comments about Kiva. My small loans have helped send kids to school, outfitted a school with materials, and enabled a woman to buy stuff for her business. A little goes a long way.
Now, libertarians and "conservatives" (the fake, reflexive haters, open and closeted both, not the few genuine thoughtful intellects in the realm), will start screaming about responsibility, freedumb, and government coercion/the horrors of having to pay any taxes except to cover our global subjugation and genocide programs (the DoD). Their essential complaint will boil down to THEIR sense of entitlement to the best of the US without recognizing the advantage of socially-flatter prosperity, and the fact we benefit directly, but especially the rich, as the children of empire.
https://www.unicef.org/…/Transformative_Transfers_LiberiaCa…
If there was any way to inject this into an aerosol air-horn....
I would have to say there probably WOULD be some Americans that would totally misuse such an opportunity.
They'd be overwhelmingly white, rural (or small-town, anyway), and od'ing on heroin, though.
There was a program in the US to have a basic income in the 70's under Nixon who was in favor of it. As I recall it the bill passed the House but died in the Senate because the Democrats voted against it. The Democrats figured the bill wasn't giving enough, wanted a higher figure and after that it was never revived.
You have unfairly lumped Libertarians in your rant there. Non-agression is a fundamental principle, just as is supporting a large standing military is not supported. I agree that Republican's support of a large military isn't ideal, but liberals/socialists are also keen on using force to oppress and subjugate, i.e., using force to require taxes be paid by a populace, for the 'greater good', as defined by the oppressors.
However, there's decent support for the concept of basic income within the Libertarian circle, as it can be seen to enhance liberty and freedom - though there is the whole challenge of the funding coming from taxation to get around :D A search for 'libertarian basic income' will yield good info.
A great analogy around the thinking of a Libertarian - "Is it worth pointing a gun at someone to force them to fund my plan?" Remember, all governments must resort to force to enforce their agenda.
As a supporter of Basic Income, I was surprised by the results you have given. I thought the most we could expect was to be seeing people spend their money on consumer needs alone and thus support the economy just by strengthening the consumer base. But seeing that it also increases the entrepreneurial drive in test areas is very encouraging to say the least. Far more benefits here than I thought there would be. I agree, soon we will wonder why Basic Income was not a no-brainer right from the start!
Yeah, from everything I've seen, entrepreneurship and self-employment are an extremely common effect of unconditional cash. It appears to be widely perceived as venture capital for people.
I have even seen large surveys in the US where people are asked about what they would do with basic income, and those with the least existing access to capital (traditionally marginalized groups) are the most likely to want to use it as capital for a new small business venture.
This should have been an obvious projection based simply on results for the past 25 years with micro-loan programs.
That is essentially what I would have done also if I was given the money back when I was struggling. Free up my time and I can do big things. Like I mentioned before Pareto's Principle will be in effect. Resteemed
socialism never works. A small help is necessary but its better to teach fishing to able starving man than to serve him fish daily.
This is just redistribution of wealth. Who pays for it? The answer is obvious - the people with money pay for it. The people who worked hard to get ahead pay for it. Why should one class of society be taxed more to support another class? It's not correct. If it's not my fault that you were born poor then why should I have to pay for it? Basic Income is just the first step to Socialism.