Since our recommendation of GiveDirectly last year, we’ve seen a fair amount of pushback and skepticism. We’ve recently been speaking with donors who have supported our other top charities – and not GiveDirectly – to get a better sense of what their reservations are.
This post lays out what we see as the most common objections people have expressed to our recommendation of GiveDirectly, and our responses to such objections. Most of our responses have already been written up previously, so to a large extent this post simply attempts to consolidate them.
At this point, we feel that we have put substantial effort into understanding and responding to people’s reservations about cash transfers, and after considering all objections we fully stand behind our ranking of GiveDirectly. We encourage those who continue to disagree with us to comment on this post, highlighting which objections they find most important (including any we may have missed) and laying out what they see as weaknesses in our responses.
- Objection 1: the case for cash relies on intuition, while the case for bednets and deworming relies on rigorous research. We disagree with this, and have written that the evidence bases for cash transfers and deworming are comparable.
- Objection 2: the studies used to support the case for cash transfers aren’t applicable to the case of GiveDirectly. For example, key studies were of conditional cash transfers, while GiveDirectly makes unconditional cash transfers. We acknowledge this concern but believe that it does not apply to cash transfers any more than to deworming. In both cases (and to a lesser degree in the case of bednets), there are important differences between the programs that were studied and the programs that are being carried out today, but there are also important reasons not to dismiss the studies that are available. More at the same post linked above: Evidence of Impact for Long-term Benefits.
- Objection 3: it’s intuitively implausible that $1000 in cash for a single family (much of which is often spent on a metal roof) can do as much good as, say, 200 distributed bednets or 2000 deworming treatments. We believe that a closer study of the evidence behind all three interventions makes the case much more plausible. While we do believe bednets and deworming have strong evidence behind them, the evidence points to very small per-person effects that add up to a lot only when looked at across a large population. (We aren’t confident that deworming’s benefits are non-negligible.) Our cost-effectiveness comparisons imply that bednets and deworming are around 2-5x more cost-effective than cash, which isn’t a large multiplier: if deworming cost $2.50 instead of $0.50, or if bednets cost $25 each, we believe the calculation would weigh in favor of cash transfers (though we would guess that the same intuitive arguments would be voiced).
- Objection 4: GiveWell concedes that cash transfers are 2-5x less cost-effective (in terms of “good accomplished per dollar”) than bednets and deworming; therefore, there would need to be overwhelming considerations on other factors (such as “upside” and “learning opportunities”) to justify giving to GiveDirectly instead. Broadly speaking, we think this objection overstates the reliability, and importance, of (a) abstract estimates of how much good an intervention does relative to (b) confidence in the organization and people behind implementation. Aside from the very real considerations of “upside” and “learning opportunities” (discussed briefly here), we think that the details of implementation matter greatly, and we don’t believe it’s wise to be confident in or dismissive of such details when one has little window into them. For more, see
- Our writeup on cost-effectiveness comparisons for bednets, cash transfers, and deworming, which not only gives the bottom-line numbers but discusses the limitations to such numbers, and why they shouldn’t be taken too literally.
- Elie’s post on concerns with the Schistosomiasis Control Initiative as an organization.
- Our charity updates for Against Malaria Foundation and GiveDirectly as compared to our charity updates for Schistosomiasis Control Initiative; we believe the first two sets provide substantially stronger windows into the details of implementation.
- Objection 5: giving out cash has more potential to do harm than bednet distribution or deworming programs. We broadly agree with this claim, but we also think that bednets and deworming each have higher probabilities of having negligible positive impact. Because bednets and deworming are very specific solutions to very specific problems, they’re less likely to empower people to do self-damaging things, but also more likely to turn out to be unhelpful if the details of the scenario are different from what our analysis suggests. (To give some specific examples: bednets may be ineffective in areas of high insecticide resistance, and deworming ultimately may have negligible impact overall.) In addition, large-scale government cash transfer programs are widespread and largely well regarded, implying that the scope of any harms that have emerged is limited. More to the point, the evidence we’ve reviewed is designed to capture average total impacts (positive and negative), and (as stated above) we believe that the evidence suggests a positive net impact for cash transfers that is of the same ballpark magnitude as the positive net impacts of bednets and deworming. We also don’t find the specific concerns that have been raised about cash transfers to be highly compelling, especially when juxtaposed with the data from GiveDirectly’s followup surveys.
- Objection 6: cash transfers have worked poorly, or would work poorly, for the U.S. poor; therefore they are not a promising approach for the developing-world poor. We disagree with this objection and addressed it at length in a previous post, The Case for Cash.
- Objection 7: cash transfers are inferior to loans, because loans are more leveraged (the money lent is repaid and can be lent again) and because loans encourage productive investment. We discussed these issues in a post entitled Cash Transfers vs. Microloans.
A final objection to our recommendation of GiveDirectly is along the lines of, “Even if GiveDirectly has important advantages relative to other groups you’ve looked at, it just doesn’t pass the smell test that giving money directly to the poor is the 2nd-best way to help them. It seems like an overly simple solution; there must be something (other than bednets) that’s better.”
In some sense we agree with this: we believe there is probably some giving opportunity out there that beats all of our current top charities, and we’re looking actively for it via GiveWell Labs. Given the information we have and the approach we’ve taken today, however – looking for interventions that have strong evidence behind them and concrete room for more funding (taking into account that some of the best-proven interventions have already attracted the funding needed for straightforward rollouts) – we think it’s fairly clear that GiveDirectly’s work makes the short list.
We’ve frankly been puzzled by the amount of pushback we’ve received on GiveDirectly, relative to SCI, since the evidence on deworming looks no better than the evidence on cash transfers and since we’ve voiced what we see as more serious concerns about SCI. We’ve seen a level of skepticism applied to evidence on cash transfers that we haven’t seen applied to anything else we’ve written – which is largely a good thing (we want skepticism applied to our work), but also raises the question of whether there are deeper-seated, more intuitive objections to GiveDirectly than what’s been explicitly voiced. One guess we’ve made is that to many, what’s exciting about GiveWell is the idea of using extraordinary analysis to produce extraordinary results. People expect “the best option of all” to look more like “saving lives for absurdly low amounts of money” than like “getting money directly to the poor and letting them spend it as they will.”
Our response to this line of thinking is that the challenges of analyzing and solving problems half a world away, at scale, are real and significant – not so significant that we should drop all attempts to do better than cash transfers, but significant enough that we shouldn’t assume we’ll see much better options than cash transfers either. Having looked far and wide for underfunded yet evidence-backed interventions, we’ve concluded that having a high enough level of technocratic knowledge to do “better than cash” isn’t impossible, but it’s extremely difficult. The bar is high, and we’ve only found one charity that (not overwhelmingly) clears it. And to us, doing extraordinary analysis means being willing to embrace that result, as many less informed donors (who end up taking charities’ bold claims at face value) will not.
With that said, we also don’t think cash transfers should be seen as either an “easy” or an “unexciting” intervention. The difference between wealthy developed-world citizens and the world’s poorest people is massive, and I find it continually stunning how high a percentage of someone’s income I can provide by giving a small percentage of my own. To me, being able to send my dollars directly to the world’s poorest people, living half a world away – with only ~10% diverted to costs along the way – is an astonishing opportunity.
Comments
Well put, Holden.
Your responses to Objections #1-7 seem eminently sensible.
I generally agree with this post. A few points:
You mostly compare cash transfers with deworming. This makes sense insofar as you rank AMF above GiveDirectly, and presumably most of the objections that you’ve gotten have been to GiveWell ranking GiveDirectly above SCI. But there remains the question of why you think that GiveDirectly is a giving opportunity that’s in the same ballpark as AMF.
Suppose for the sake of argument that the actual (as opposed to explicit) expected cost of saving a life by donating to AMF is $10k, and that saving a life averts a loss of 40 DALYs. In order for the direct impact of GiveDirectly to beat out that of AMF, the benefit of doubling a family’s consumption for a year would have to be 4 DALYs. Prima facie, this seems very implausible.
There are various potentially credible responses to this objection to placing GiveDirectly in the same ballpark as AMF. GiveDirectly is innovative, and funding it may lay the groundwork for effective large scale cash transfers in the future. It could be that the actual expected value of bed net distribution is a lot lower than $10k / life saved. Doubling a family’s consumption could conceivably substantially raise the probability of its children surviving. There’s a stronger case for room for more funding in the domain of cash transfers than in the domain of bed net distribution. I’m not arguing against placing the two charities in the same ballpark — I’m just pointing out that the post doesn’t address the AMF vs. GiveDirectly comparison.
On the point of room for more funding — what’s the status of the upcoming AMF update? Last year AMF had difficulty finding bed net distributions to fund, and I’m wondering whether the situation is different this year.
I was willing to donate to GiveDirectly in addition to AMF, however in Australia they don’t have a registered bank account and instead rely on the generous offer of an individual to bank the money and then pay the currency exchange fees. This for me was a step too far as I’d prefer to give directly (no pun intended) to the charity.
Conversely your recommendation supporting this charity challenged my own perception of what it meant to donate to charity as inherently I don’t like the idea of a condition free “hand out”, but your robust arguments made me realise that I needed to fight the inner western world sense of knowing what is best, and instead empowering individuals to decide where the money is best spent. I agree it seems less ‘exciting’ as the donation offers something less tangible (ie. not purchasing x nets), but I look forwards to hearing more of the outcomes of the cash donations and the longer term impact.
Perhaps you folks can help me with a question I’ve had about cash transfers in my own mind.
If you took a population of people in a *closed system* and gave each family $1000, the population as a whole wouldn’t be any richer, since money would implicitly be de-valued such that it was as if nobody got anything.
Let’s presume we did some successful fundraising and had $2 billion to give to people in Somalia, which might work out to $1000 per family. Two individuals might excitedly head down to the store to purchase an item, expecting it to still cost $X. But now that everyone has some extra cash to spend, the seller would tend to increase the price of that item such that it was if no-one had received any cash.
Is my rough sense of this on track?
Now, Somalia isn’t a closed system. At some point, the extra cash would ripple outward and give Somalian’s increased buying power in terms of importing goods and services from other countries. Some of the countries they’d be importing from would be rich countries, and so the cash at that point would actually turn into additional goods and services flowing out of rich countries and into Somalia, which would have the potential to increase quality of life there.
From what I describe above, I get a bit nervous that cash transfers might cause local inflation more than they would cause goods and services to flow into a country. Eventually I sense that they’d result in extra goods and services, but that might take some time to work itself out in the economy. Not sure.
So I’m being a bit fuzzy here, but do people get what I’m getting at? Does anyone have some thoughts to respond with to help me better understand this line of thinking?
Thanks!
Daniel, while I’m no expert, I can think of three reasons why we shouldn’t be too concerned. First of all inflation is pretty easily measured, so if turns out to be a problem we’ll find out easily. Second, the amount of money being donated is very small compared to the economy of an entire country, even a poor one. Third, inflation doesn’t result from having more money to spend unless there are bottlenecks preventing businesses from expanding. There’s little reason to believe that the sort of things that poor villagers are likely to buy are limited in supply; on the contrary, poor areas have a lot of room for growth.
I also remark that many people think they understand money more than they think they understand bednets, which may account for the surprising volume of pushback. I mean, I certainly wouldn’t presume to second-guess the measured effects of distributing bednets…
Jonah: I’m also looking forward to Givewell’s update, but I should note that AMF is an unusually transparent charity. If you follow their social media feed, or even just check their website, there are updates regarding funding status.
Rebecca: It is possible to make a wire transfer directly from an Australian bank account to a US one, so you could send money directly to GiveDirectly’s account in the US this way. Fees for this are typically in the tens of dollars.
Daniel: Even if the recipient country were a closed system, your donation is not made evenly to every person, it’s given to the poorest. So even in such a case you could expect to reduce income inequality.
Eliezer: I think you may have hit on something here. It’s analogous to Parkinson’s law of triviality: http://en.wikipedia.org/wiki/Bikeshedding
Jonah – thanks for the question. The important thing to note is that we think that much of the benefits of cash transfers come in the form of high-ROI investment opportunities that magnify the consumption impact beyond the simple size of the transfer, so it’s not really fair to compare the direct benefits of the cash transfers exclusively as consumption with the AMF lives saved. Our assumptions about the returns vary, but if you look at our cost-effectiveness spreadsheet, you’ll see that the estimated benefits per dollar of GD’s transfers are assumed to range from 0.32% to 1.21% of one year’s annual consumption. On an baseline per capita annual consumption of $237, this implies that the total financial benefit gained by the recipient ranges from ~75% to ~290% of the cost to the giver. If you take roughly 200% as the midpoint, the implication in your model is roughly that doubling someone’s consumption is worth half a DALY. That doesn’t strike me as especially implausible.
Note also that there are other ways to back out slightly different DALY vs $ comparisons from our cost-effectiveness figures. For instance, our financial returns analysis monetizes the 0.0021 DALY benefit per person treated with deworming pills arising from minor health benefits as being worth a 0.51% increase in consumption. This suggests that doubling a person’s consumption for a year is worth about 0.4 DALYs.
On AMF: It looks like Against Malaria Foundation will probably be successful in finding enough distributions; we’ll have an update before giving season. AMF publishes some some details about potential distributions here and here.
If one of the issues being discussed is the cost effectiveness of GiveDirectly’s approach, why isn’t there more debate around the amount of the cash transfer? Cash transfer studies have proven impacts for as low as a couple hundred dollars. What are GiveDirectly’s plans for testing this? Also, in regards to one of the most popular benefits of cash transfers, choice, to what extent does GiveDirectly know whether beneficiaries face pressure from other community or family members on how to use the funds? How does receiving the cash transfer as a lump sum payment versus as small, regular payments affect beneficiary control over funds?
Sara – good questions, thanks. The best place to look for info on GiveDirectly’s plans to study different transfer sizes and frequency is footnote 36 and accompanying text in our April 2012 review of GiveDirectly and this table in our May 2013 update. (Briefly, they decided post-hoc to compare impacts of $300 and $1,000 transfers in their RCT, in addition to looking for differences between lump sum and ongoing transfers, which was in their preregistered plans (PPT).) GiveDirectly also does extensive surveys of recipients to determine whether and what kind of issues they faced in receiving their transfers, including things like making purchases that they regretted later. The most recent survey results are available here.
Paternalism (http://www.overcomingbias.com/2010/05/puzzling-paternalism.html) and signaling (http://hanson.gmu.edu/showcare.pdf) explain this extreme preference for gifts in kind rather than cash.
Do you know if there are any attempts to fund raise Givedirectly with crowd-sourcing mechanisms? For example, I would be much more inclined to donate $100 if it was conditional on 99 other people also donating $100. My $100 donation would have the final impact of a $10,000 transfer. If the kickstarter model had a charity equivalent, I imagine that more people would be willing to engage in cash transfer.
Please indulge a bit of psychological speculation on my part. I think that Givedirectly has a very different psychological situation than other charities. Theoretically, we could donate enough money to fund all bed-net and deworming programs. Each donation given to charities that run projects brings us closer to an achievable end. Givedirectly, on the other hand, has no final moment — there is no moment of victory. There is no foreseeable point at which the poor will have access to the money they need to truly flourish. I think that this creates both positive and negative psychological consequences for givers. On one hand, Givedirectly creates a (relatively) non-paternalistic bond between giver and receiver. You put faith in someone else to choose what is best for them — and this is exciting. On the other hand, Givedirectly doesn’t make you feel like you are saving lives. Psychologically, Givedirectly might not motivate people as much as other charitable causes. I think that this might change with time and reflection, but for now, there are good reasons to think strategically about the underlying motivational structure that guides our donations to Givedirectly.
I wish that there was a way to raise larger pools of money, based on groups of individuals coming together with the shared knowledge that they will — as a group of contributors — amplify each other’s impact. I think that this would take advantage of the psychological situation that structures donations to Givedirectly.
Has Givewell thought about hosting this sort of a crowd-sourced project? I haven’t read too much on this sight, so forgive me if this is covered elsewhere.
Thanks,
Joseph
Daniel: I mostly agree with Brian’s answer. I’d add something that Holden’s written elsewhere to address a similar question:
Joseph: We’ve written about some of our qualms about the kind of matching structure you propose here. That’s not to say we would never entertain the possibility, but it’s not a high priority for us right now.
Thanks, Holden, you’ve succinctly addressed most of the concerns I’ve had regarding cash transfers.
I do have two other concerns that I’m sure have already been addressed somewhere: theft and corruption/bribery. There is a single paragraph on GiveDirectly’s website discussing corruption and audits to measure/prevent corruption. How does GiveWell feel about the risk of theft, bribery, and corruption with cash transfers? I would worry that local criminals, police, or corrupt government officials would be pretty adept at arranging a protection racket, fake tax, or systematic bribery scheme if they knew money would suddenly be appearing in a poor village. Mobutu Sese Seko sure would have found a way!
Jason: GiveDirectly does extensive surveys of recipients in an attempt to answer these kinds of questions. In our most recent update, we report what we know from these surveys. (See the line “Reports M-PESA agent demanded bribe” in the tables and the list of anecdotal challenges, including “In one village, the village elder visited recipient households, falsely purporting to be collecting ground nuts on behalf of GiveDirectly” at that link.)
There may be some bribery and corruption that takes place around GiveDirectly’s transfers that are not caught by these surveys, but overall the surveys increase our confidence that funds are getting where they are supposed to and not being captured by bribes or corruption.
> Our response to this line of thinking is that the challenges of analyzing and solving problems half a world away, at scale, are real and significant
In support of that, room for funding is also a factor again: not only is it hard to find programs clearly better than cash, but when such programs *are* found they’ve often been funded pretty well by governments, big philanthropists, and so on. Which is obviously wonderful for everyone helped, but also means the rest of us need to find other stuff to work on.
“People expect ‘the best option of all’ to look more like ‘saving lives for absurdly low amounts of money’ than like ‘getting money directly to the poor and letting them spend it as they will.'”
It seems reasonable to me that the best option of all is giving cash, as long as we restrict attention to *proven* interventions in the here-and-now. “Proven” basically means that someone has already done it, or done something extremely similar, and therefore excludes any intervention that would seriously change the world (because if someone has already changed the world in that particular way, then it’s already been done so you can’t do it again, and if they haven’t, then it’s not “proven”)
I think that a lot of important humanitarian victories consist of these kinds of major changes to the world. The economic reforms of Deng Xiaoping in China lifted hundreds of millions of people out of poverty. The green revolution of Norman Borlaug fed hundreds of millions.
Yet as far as I am aware, if a charity tries to either fund a very ambitious agro-science program, or a political and economic revolution in a specific part of the world, both would count as being unproven and risky. And, of course, they are. We don’t hear about failures as easily as successes.
The fact that direct cash giving fails to pass the “smell test” is really an indication that restricting charitable giving to proven, short-term interventions is massively limiting the potential good we can do.
JadedRationalist, I think there’s something to that, which is why we’re now broadening our criteria beyond “proven/cost-effective/scalable” (more). That said, most of the people who have pushed back re: GiveDirectly are people who are much more positive on our other top charities.
“That said, most of the people who have pushed back re: GiveDirectly”
Yeah, I suspect that I am coming from a very different place; I consider myself a rationalist first and an altruist second, I have read Robin Hanson on signalling etc etc.
Anyway, I think it’s great that Givewell is moving in the direction of big impacts. It will be very tough, you’re trying to do something that very few have tried. If I were richer I would chip in financially; well, maybe one day I will be in that position.
Is Givewell considering pushing Charter Cities (Paul Romer’s idea)?
We spoke to Charter Cities a while ago and are potentially interested in the idea if a relevant funding opportunity comes up.
DIRECTED/CONDITIONAL giving (by many orgs such as Technoserve, Women-to-Women, etc.) places money in the hands of women, who take responsibility for feeding their families, paying school fees and getting children to school, etc. I am very concerned that undirected giving does not benefit families…. The story (on NPR) about the man who bought a 2nd hand motorcycle and now had a taxi business did not address the matter of responsibility and who was benefiting from his free-enterprise prosperity.
I think you’re overlooking the most plausible reason for why you’ve had a disproportionate amount of push-back on cash transfers to the poor–which is quite simply prejudice.
Even the philanthropic want to believe that they are the wise, first-world altruist who knows better and is bestowing their benevolence on the poor and ignorant, thereby wonderfully improving their lives.
It sits less well to realize that perhaps one of the overwhelming reasons the poor are so badly off is not because they are somehow significantly less capable (which would also mean that their situation is perhaps to an extent unavoidable or can be blamed on them), but because they just have less money than us. If they don’t need our wisdom and direction, it makes more glaring the fact that our being so much wealthier is nothing but the injustice of happenstance. And that makes giving more unsettling than flattering, because it calls the legitimacy of a huge amount of our money into question, not just the small part we donate.
And, of course, there’s plain old unconscious racism (and classism) when it comes to discomfort with treating the recipients of our donations as individuals with the ability and right to make their own decisions, rather than be subject to our judgments of what’s best for them.
I’m sure that Giving Directly has addressed this question previously, but I haven’t seen their response.
In my experience, many societies have something like what social scientists call an “image of limited good.” That is, the idea that there is a finite amount of good stuff to go around. So, to generalize greatly, if one person gets ahead in such a society, he is presumed to have done so illegitimately (e.g., through witchcraft) or at least will face strong societal pressure to share the wealth with relatives and friends (in that order) — thus making any kind of capital accumulation or business development less possible.
So if Giving Directly gives to one person in a village, they would need to give to many, to avert jealousy and its “remedies” like sabotage, or more witchcraft (which does, in practice, often have real effects on people).
And if giving to one village, Giving Directly would probably need to give to the next village over for the same reason. And if they give to one whole region, how about the region next door? See the issue I’m raising?
As I said, Giving Directly has no doubt seen this problem and addressed it. But I haven’t seen their answer yet. Where could I read it?
That last paragraph makes the few objections to givedirectly seem really insignificant.
“With that said, we also don’t think cash transfers should be seen as either an “easy” or an “unexciting” intervention. The difference between wealthy developed-world citizens and the world’s poorest people is massive, and I find it continually stunning how high a percentage of someone’s income I can provide by giving a small percentage of my own. To me, being able to send my dollars directly to the world’s poorest people, living half a world away – with only ~10% diverted to costs along the way – is an astonishing opportunity.”
Thanks all for the comments.
Risa – my impression is that the existing evidence is mixed on how the returns to cash transfers vary by the gender of the recipient. (For some references, see this Development Impact blog post.) This is one of the questions GiveDirectly is aiming to address in their RCT, so we should know more in the future.
Monique – I agree that such feelings could play a role in the reactions we’ve experienced, though within the community of donors that use our research, we expect them to be less common. Many of the donors who use our research give quite large portions of their income.
David – GiveDirectly typically gives to a large portion, but not all, of the households in a village, and is experimenting with giving transfers to a larger portion of households. (See our recent conversation notes on this topic here.) They generally do extensive surveys of recipients, including asking about any harassment or maltreatment they face in the community, and find relatively low levels of issues. See this section of our review of GiveDirectly and this section of our most recent update.
Giving to prevent disease seems more fundemantally right and fair in a way. Ridding someone of a disease also empowers them to make their own life, without creating a dependency. Just giving money out can create dependency as well as creating ill feeling to those that don’t receive it. And competing for handouts is the opposite of being an entrepeneur…
I prefer to give money for education, disease and war prevention, for disaster relief. Everyone deserves to have these things to make a fair start. After that it’s what you make for yourself in life that generally counts.
David – You might be interested in a recent study by Chris Blattman and coauthors that looked into this issue with respect to an unconditional cash transfer program in north Uganda. Vulnerable recipients in treatment villages received $150 unconditional grants, business skills training and (a randomized mix of) other trainings and support. Recipients did report facing more community hostility than respondents in control villages, but the average level of hostility reported by recipients was low (less than 1 on an index that ranged from 0 for no hostility to 12 for high hostility). The study is available here.
Every single plausible objection against unconditional cash transfers that I’ve ever heard covered here. Great post.
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