Itâ€™s the Economy: Is It Nuts to Give to the Poor Without Strings Attached?

Illustration by Andrea Wan

Bernard Omondi lives in a small Kenyan village in a rural district called Siaya that sits right on the Equator and is almost impossible to get to. He has spent years working on and off as a day laborer, moving stones on construction sites, and commuting long distances over rough dirt roads. When he could find work, he made about $2 a day. When he couldn't, his two sons sometimes went hungry. Then one morning last year, Omondi woke up to an unusual text message. "When I saw the message, I jumped up," he recalled. "My wife said, 'Bernard, what is it?' " He told her he had just been given $500 with no strings attached. " It's here! " he said.

Deep thoughts this week:

1. It's becoming popular to give money directly to the poor.

2. In at least one case, with no strings attached.

3. And no one seems to be blowing it like a lottery winner.

A month earlier, Omondi told me, a couple of strangers showed up in his village, and explained that they worked for a charity, GiveDirectly, that gave money to poor people without any preconditions. They had chosen this area, they said, because it was among the most impoverished they could find — most people grew vegetables on small plots, lived in dirt-floored houses and worked sporadically at informal jobs. The poorest people in the village, the strangers explained, would be eligible to receive $1,000, about a year's income for a family, spread over two payments. Not surprisingly, many villagers were incredulous. Some thought a politician was trying to buy their votes; others presumed it was some sort of trick. "My friends didn't believe it at all," Omondi said. "They told me, 'They will come for it one day.' "

A charity that gives away money, as opposed to, say, offering agricultural training or medicine, does seem a bit unusual. That's partly because governments and philanthropists have emphasized solving long-term economic problems rather than urgent needs. But in the past decade it has become increasingly common to give money right to the very poor. After Mexico's economic crisis in the mid-1990s, Santiago Levy, a government economist, proposed getting rid of subsidies for milk, tortillas and other staples, and replacing them with a program that just gave money to the very poor, as long as they sent their children to school and took them for regular health checkups.

Cabinet ministers worried that parents might use the money to buy alcohol and cigarettes rather than milk and tortillas, and that sending cash might lead to a rise in domestic violence as families fought over what to do with the money. So Levy commissioned studies that compared spending habits between the towns that received money and similar villages that didn't. The results were promising; researchers found that children in the cash program were more likely to stay in school, families were less likely to get sick and people ate a more healthful diet. Recipients also didn't tend to blow the money on booze or cigarettes, and many even invested a chunk of what they received. Today, more than six million Mexican families get cash transfers.

Dozens of countries imitated Mexico's example and their results inspired the founders of GiveDirectly, a handful of graduate students at Harvard and M.I.T., who were studying the economics of various developing countries. They chose to situate the charity in Kenya because it was a poor country with a well-developed system for sending money to anyone with a cheap cellphone. But they also planned to differentiate their charity; whereas most of the government programs give people money for as long as they qualify, GiveDirectly offers people a one-time grant, spread over the course of several months, and without any requirements.

"I'm hopeful about GiveDirectly's model, but what they're doing is very different from what some of the research has suggested is really working," Chris Blattman, an economist who teaches at Columbia and who studies cash transfers, told me. "They're just giving away money with no strings. It's just manna falling onto your mobile phone." An outside group is studying GiveDirectly's impact; final results are expected later this year.