Last year, GiveWell revised its estimate of our cost-effectiveness, rating our work 3–4x higher than before. That shift was driven in part by evidence on how cash transfers affect local economies. In this post, we break down that evidence, explaining how cash boosts local economies.

Summary

• 📈 A one-time $1,000 GiveDirectly cash transfer generated 2.5x economic activity in rural Kenya.
• 💵 Most recipients spent locally, raising business revenue by 65% without causing major inflation.
• 🌍 Researchers are now running a study 10x larger in Malawi to test how cash scales as an economic stimulus.

One of the world's largest cash studies found that GiveDirectly's program, giving a one-time $1,000 cash transfer to 10,500 poor households in rural Kenya, led to 2.5x that amount in economic growth.

Now, we’re building on these results to launch the world's biggest randomized controlled trial on cash, and asking even bigger questions [...]

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Outline:

(01:25) Cash boosted the local economy because families spent close to home

(02:21) 🤝 Neighbors who didn't get cash also earned more and lived better as businesses grew

(02:55) Every $1 delivered as cash grew the local economy by $2.50

(03:36) 📈 Click to read how the multiplier is calculated

(04:37) Cash caused nearly no inflation because businesses already had room to grow

(06:10) 💡 Researchers credit this low inflation to slack in the local economy

(07:19) Next we're testing if cash can transform entire regional economies

(07:55) 🔎 Growth in Kenya beat predictions; the Malawi study will test how far markets can stretch

(08:29) Malawi will show us just how far cash can go

(10:22) Additional commentary

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First published:

Source:

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Narrated by TYPE III AUDIO.

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