Give Directly Interview
“ A solution to the problem that people not having enough money, is to give them some. “ Joe Huston, Give Directly.
Imagine a world where nobody has to live under the extreme poverty line. Where people would have their basic needs met, not having to spend all their time worrying about food and water. Getting there could be simpler than we might think.
Today, Great.com talks with Joe Huston from Give Directly.
Listen here or find us on your favorite podcast app.
February 10, 2020
Can Unconditional Cash Transfers End Extreme Poverty?
Can unconditional cash transfers end extreme poverty?
“ A solution to the problem that people not having enough money, is to give them some. “ Joe Huston, Give Directly.
Imagine a world where nobody has to live under the extreme poverty line. Where people would have their basic needs met, not having to spend all their time worrying about food and water. Getting there could be simpler than we might think.
Today, Great.com talks with Joe Huston from Give Directly.
Give Directly is currently running one of the world’s largest experiments on unconditional money transfers, lifting entire communities out of extreme poverty.
This is exactly what it sounds like. Give Directly gives money to people who need it, no strings attached. They don't have to pay that money back. They can spend it on whatever they want. And they don't have to meet any kind of special requirements to receive that money. The technical term for this is unconditional cash transfers.
What are the challenges with this approach? How do you decide who should receive the money? What if it’s spent on drugs and alcohol? Will people stop working?
Unconditional money transfers might seem like a crazy idea, but it’s one of the most well-researched kinds of charity. Listen to today’s episode to find out what happens, when entire societies get lifted out of extreme poverty.
Want to support Give Directly? You can do so here.
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[00:00:01] All right, welcome to the Great Share this podcast and I am here with Joe Houston from Give Directly. And as you know, the purpose of this podcast is to explain what a shared is doing in a way that is easy to understand. And I have never felt so useless in my life because what I love about GiveDirectly is that it is quite easy to understand what you guys are doing. GiveDirectly is giving an opportunity for governments, organizations and individual donors to give money directly to people that are extremely poor in Africa.
[00:00:43] So, Joe, how are you?
[00:00:47] I’m doing well. Thank you so much for having me.
[00:00:50] I’m so, so excited to speak to Xactly organization, and I will tell you why I’m so excited about it later. But first, how would you explain your organization to someone that isn’t familiar with what you’re doing?
[00:01:06] Givedirectly gives money to people who need it. No strings attached. They don’t have to pay that money back. They can spend it on whatever they want. And they don’t have to meet any kind of special requirements to receive that money. The technical term for this is unconditional cash transfers. But the basic idea is one way to address the problem of people not having enough money is to give them some.
[00:01:30] So I think that sounds really good. And at the same time, I might wonder why, if I want to give money to someone and I want that money to improve lives, would it make sense if I spent money on medicine or water or food? Isn’t there a chance that these people will just spend that on maybe alcohol or something like that?
[00:01:53] So I think those are quite good questions and something we’ve been able to do over the last couple of decades in development economics is start to test those questions rigorously and experimentally that the Nobel Prize in economics was just awarded to a group of people who really sort of brought this to the forefront in economics. And so we’ve run these random these experiments that randomly give people one program versus another versus nothing and then track the results in. Cash is actually one of the programs that’s been studied more than anything else. And the evidence is pretty clear that you don’t see on average increases in spending on alcohol or tobacco gambling in the developing world. You also don’t see reductions in work when you track that as well. I think the basic insight is a. You know, we’ve got a Christmas coming up in a lot of the world and a lot of people are about to get a lot of bad, yes, because it’s hard to guess what other people want. And even if you try your best and even if you know that person really well, you live with them or they’re your mother or your father. We felt that on our face all the time and trying to get a thoughtful gift that people actually want. The problem of trying to purchase something for somebody living in rural Kenya, if you’re let you know, living in Stockholm or New York or Berlin, it is that much harder. You don’t know anything about their life. And so poorly, some of the kind of aid budget that’s spent to help these people, it makes sense that they should probably just spend it themselves.
[00:03:27] Mm hmm.
[00:03:28] So what would the difference them be giving money to you compared to me? I live in Stockholm. If I were to meet the homeless man, I actually got approached by homeless man on the street yesterday and he asked for money and I said no. Even though it was hurting. But what would the difference be between giving it to him and giving it to give directly?
[00:03:52] Yeah, I think about this a lot. New York has lots of homelessness as well and with the combination or a worse social safety net better, but I think the kind of big differences are we’re reaching people typically who are living in whole communities in rural areas. And so it’s people who are born poor.
[00:04:14] And by.
[00:04:18] By that sort of luck, Will, you know, statistically you’re likely to be poor for a lot of their lives.
[00:04:26] And I think homelessness in the developed world. It’s more of a sort of social policy question.
[00:04:34] I mean, so first of all, if you if you’d like to give that to homeless people in your city and go for it, I’d do it all the time. But I do think it’s a trickier social policy question than places that have less well-developed social safety nets. There’s also a an adverse selection question that I looked at, an adverse selection was just I mean, the word sorry that homelessness in the US or in Sweden is filtered through all the kind of problems in our social safety net or in what’s happening in society or things like that. And so, you know, for example, in the US, rates of alcoholism or drug abuse are a lot higher among homeless populations. And that’s actually even more true in the visible homeless versus people who are in homeless shelters who are actually most of the homeless population. So could you say that’s not true in Kenya or Uganda where we’re working?
[00:05:36] So could you say then that people who are extremely poor and homeless in developed countries are more likely to have other problems like alcoholism, drug use, than someone that was born into a situation where maybe the whole community is poor?
[00:05:53] Yeah, that’s that’s what I’m saying. Yeah, and it’s not the case that every homeless person is that way.
[00:05:59] Of course, you part I think the sort of most visible people who are homeless are not even now that representative that most people, for example, in New York City are in fact in shelters. Not, not not on the street. And so there is there is an even more of the problem of the person you see isn’t even the representative homeless person in the US or likely in Sweden.
[00:06:23] So when you’re done, give the money to the extreme poor. How do you choose who gets to give it to a whole community and take one community at a time? Or do kind of find out who in this community needs the money the most? On what basis do you pick the recipients?
[00:06:42]
These days, whenever we can control it entirely ourselves, you know, we work with different partners and sometimes have different restrictions. But whenever we can design the program ourselves, we enroll everybody in a community and go. Community by community. There’s a tradeoff between trying to pick the poorest or maybe the person you think will do the most good versus I think the kind of social awkwardness, at least of, you know, trying to pick winners and losers or, you know, sort of creating a sort of big lottery effect within someone’s community.
[00:07:17] Right. So it almost becomes like a universal basic income model then for small societies.
[00:07:24] Yeah. And we’re actually doing a large scale universal basic income experiment.
[00:07:30] So exciting.
[00:07:33] And so in some communities in Kenya, every adult in the community will receive monthly payments equal to the poverty line going out for twelve years.
[00:07:42] Wow. I want to dive deep, not deep.
[00:07:46] You have 20 minutes, but I want to dive into that. But first, I must ask. So one reason that I would like to give money to the gentleman who approached me on the street is that there is a human and personal connection there. So if I were to give to you, would that mean that, yes, someone gets the money, but I don’t get the sense that I’m connected to someone? Is there a way for me to know as a donor who that money went to?
[00:08:12] I think the best way to get a sense of that is we’ve been experiment. This is, I think, a classic problem in trying to do the most good with your money. That often the most good is further away from you. But you may do less giving overall if you’re not sort of seeing the results or seeing that connection. Something we did on our site is live at GiveDirectly. Org is just a kind of newsfeed of questions and sort of answers from the people we give cash to about what their challenges are, their priorities or what they spent the money on or their experience with GiveDirectly. And so it’s a live raw bill. If you go on now, they’ll be updated in the last few hours, probably people that are just sharing their experience.
[00:08:59] I’ve seen that. That’s super cool. Could you say again what the link is for? Is anyone watching?
[00:09:04] Yeah. It’s live. GiveDirectly dot org.
[00:09:06] Yeah. Go there for sure. Now, this universal basic income project is supercooled, I believe. What do you hope to get out of it?
[00:09:15] So, you know, over the last few years, universal basic income, this idea that we could establish a flaw in our society and make sure nobody’s living below a certain amount by giving them that amount. You know, that’s sort of been in public debate in a lot of different countries. You know, in a referendum in Switzerland, pilots in Canada and the Netherlands and in the United States. And we wanted to sort of ground that conversation in the evidence that partly there’s a lot of evidence already in how people spend cash. And partly if you have specific questions about how a universal basic income works, you can just test those. You know, you don’t have to theorize or sort of argue in this kind of sort of back and forth and just assertions, you can just say, OK, well, these are my questions and let’s put it to the test. And so, you know, our biggest goal from an evidence perspective is to provide to ground that conversation that I think is really important for trillions of dollars of social safety spend around the world in the actual evidence of what works and doesn’t.
[00:10:25] So when is their souls? When? When should I have another interview with you and see what did you learn from all of this?
[00:10:33] The first results should be out by next summer. So, you know, we’ve kicked off payments by by next spring or so, we’ll be fifteen to 18 months in those monthly payments. And our plan is to check in regularly or actually to have a external nonprofit check in regularly with people receiving cash and not to see how things are going.
[00:10:52] So there is a poor village in Kenya, for example, and someone is coming in maybe with a GiveDirectly flag and saying, hey, guys, we want to pay for you to have an income for twelve years. What is the reaction you get from this people?
[00:11:07] What is the reaction, I guess, from anyone receiving these cash transfers without any boundaries?
[00:11:13] It’s really interesting. I in the very first village where we took the basic encounter approach vs. some of the other programs were done when they give back like team member kind of announced it. People broke out into clapping. You know, they were recite that is everyone’s getting it versus us trying to pick the poorest.
[00:11:35] They believe you. Well, what’s their skepticism? It’s so good to be true. Right.
[00:11:39] Right. In this group that they believed us. We worked in kind of surrounding areas. They were like, we have gone to new places, especially actually in Kenya, where people were a lot more skeptical that, you know, it sounds in the same way. It seemed like a scam in Sweden or the US. People think it’s a, you know, a scam or there must be a catch or we’re gonna come back for the money in some way. And so, you know, for that, we’ve done all sorts of things, whether it’s speaking to church groups or getting on local radio to try to kind of explain what the idea is.
[00:12:11] Mm hmm. It’s such a direct way to do something nice for someone. I think that’s a big part of what about what I liked about this project.
[00:12:23] I also liked that when you give money to someone in a poor community, that money stays in the community. Yeah. They might buy a service from a neighbor. Then that person gets the money and buy another service from another neighbor.
[00:12:35] You have this positive circle.
[00:12:37] We actually have the results. We tried to study that question exactly with another project, sort of. How do you add up the full economic effect? Mm hmm. Interesting, because it’s tricky. You have to talk to everybody in the economy. You have to measure all the prices, go to every market. And so we did that in Kenya while I was there. And results are coming out in a week or so when that sort of sneak peak punchline is exactly what you said, that the money is sort of circulating within the economy. And so the total effect of the cash transfer is much larger than just the kind of initial gift.
[00:13:15] Yeah. And it’s got to be very useful to be able to test that in an economy that I guess is less complex than one that would be in the US, for example, or at least to at least maybe more localized or something better.
[00:13:31] Yeah. Yeah. Yeah. That more sort of. Yeah you can. You know it’s something we did is go within this region, go to all sixty weekly markets that people were typically shopping at and interview each one.
[00:13:47]
And so I’m sure you could figure out how to do that in the states or Sweden. But yeah it would. I’d have to think about how to do it right.
[00:13:59] So Christmas is coming up. Imagine me listening to this program and thinks this sounds really awesome. What could I how much could I improve someone’s life? That is extremely poor because I guess now that someone that is listening, for example, the homeless person that walked up to me, he’s said that, hey, I’m homeless. And I said, oh, I understand. And he said, no, you don’t. Right. And the same thing goes for someone that is living in extreme poverty. I don’t understand. So what can. How much could improve someone’s life with, let’s say, one hundred dollars in these communities?
[00:14:39] Immeasurably, I think one thing that was interesting from the basic income experiment is we were giving out smaller amounts than we usually do.
[00:14:49] You know, often we’re trying to give about a thousand dollars per household in a few chunks. One time with the basic income program, it was $20 dollar Grant’s monthly. And when we talk to people who are sort of first receiving those 20 dollar grants, I think it was something like 40 percent of people had never had one month’s worth of basic income all at once, had just literally never had twenty dollars all at once. And two thirds of people had never had two months worth of basic income. You know, the kind of forty dollars all at once. The lie that GiveDirectly about orig is a great place to see what the types of things are that people buy. There’s a lot of kind of, you know, how much a go-carts or how much a cow costs or a bag of maize, any of that, I think makes it a lot more visceral.
[00:15:42] So $20 would be a month’s salary for an average person in that community. Or how do you mean by that number?
[00:15:51] Yeah. So it’s a we calculated it to link to. They calculate a sort of food poverty line in rural Kenya, which is what is the amount of money required to buy enough food to survive. And so it’s a very kind of base minimum living and that’s about the sort of twenty to twenty dollar mark. We’ve also found that when we survey our recipients in one of the studies we did in a similar part of Kenya, they were living on an average of about sixty five cents a day, which is actually a notch less than that food poverty line.
[00:16:26] So you are pretty much doubling their income.
[00:16:29] So what happens, don’t you, so you don’t have to spend all of your income on food anymore? How I guess they would start a snowball effect where you can start improve your life. Maybe you can invest in something or save up to buy an animal or fishing net or something. Yes.
[00:16:47] And we see all of those things, other things we see spending on education. Secondary school in Kenya often isn’t free. And so and people get that it’s critical for advancing your life. And so often it’s that a top priority for the people we give cash to is put money towards education to get people through secondary school or in some cases, even university.
[00:17:14] I love the idea of the snowball effect in those communities. Now, if something what would be the best thing that could happen to your organization in the upcoming years?
[00:17:27] Something we’ve been pushing for is for this idea of direct giving to be the benchmark. And by that what we mean is when we’re thinking about how do we spend a certain budget to help a certain group of people. The starting question should be can we generate more impact than they could if we just gave them the budget? And there’s plenty of cases where that could be the case. You know, we’ve got a specialized medical intervention. You know, we should try to get malaria and that’s everywhere in the world or something like that. But a lot of the ways we spend aid budgets, I think don’t meet that basic test or maybe even worse. We don’t even know if it meets that basic test. And so the thing I would really hope for both that the kind of institutional aid funding levels, U.S. aid or Sieda differed and at the kind of individual Gebre level, is that that question, can I do more good with my own ideas or should I fund there’s becomes widespread.
[00:18:30] That idea leaked in to my mind at least, and it helps me to think about causes. So yeah, I think that’s very important. Now I wish I had more time to talk. We’re trying to keep this in under 20 minutes. So my final question is someone listening to this, maybe being as excited as I am about this project? What can they do to help out?
[00:18:55] And so the easy thing is they can give however much they are able to give to people who need and will deliver that as soon as we can. But the other thing I would note is it’s actually really hard to get people to talk about their giving. I think people think it’s personal or private or you don’t want to offend other people. And so whatever they can do to share our latest blog post or share a press piece or share this podcast to start those conversations, I think can have a sort of magnifier type of effect on what they have ever end up giving privately. That’s a big part of the obstacle to that benchmark idea taking hold or any of the other good ideas and then giving taking hold. Is that we’re too shy about talking about them.
[00:19:43] I totally agree. And we have in great other podcasts coming great grades, made a whole episode about this. If you want to check that out, it’s episode number 35 titled We Will Give All Our Money to Clickbait title.
[00:19:57] That’s not for you. That’s for our listeners. Man, this was so much fun talking about this. Thank you so much. Thank you for participating. That’s right. It was. Thank you. But I think a.