Is Giving Out Cash With No Strings Attached The Best Way To End Poverty? : Goats and Soda Forget food aid, cows and job training. An unprecedented 12-year experiment in Kenya tests the power of cash.
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How To Fix Poverty: Why Not Just Give People Money?

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How To Fix Poverty: Why Not Just Give People Money?

How To Fix Poverty: Why Not Just Give People Money?

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AUDIE CORNISH, HOST:

There's an unprecedented experiment happening in a village in Kenya. Most people there had been scraping by on less than $2 a day. But last fall, an American charity announced they're going to give every adult an extra $22 a month every month for the next 12 years, no strings attached. NPR's Nurith Aizenman traveled to the village and brought back this report.

(CROSSTALK)

NURITH AIZENMAN, BYLINE: The villagers are gathering under some trees for one of their community meetings. Suddenly everyone's cell phone starts tinkling.

(SOUNDBITE OF CELL PHONES RINGING)

AIZENMAN: It's an alert from the charity that's launched this experiment, a U.S.-based group called GiveDirectly. The money gets wired to mobile bank accounts linked to the villagers' phones. And this month's payment has just posted.

(CHEERING)

AIZENMAN: A bunch of the women break into song.

UNIDENTIFIED WOMEN: (Singing in foreign language).

AIZENMAN: GiveDirectly was founded by some economists to challenge the traditional form of aid, giving poor people a cow or schoolbooks or training programs. What if you just gave people cash, let them decide how best to use it? Over the last decade, the charity has given away tens of millions. And they've shown through rigorous studies that people don't waste it. But those were modest, one-time cash grants.

With this experiment, GiveDirectly wants to see what happens when you give people a much longer runway, a guaranteed income they can count on for years. It plans to extend these monthly payments to every adult in hundreds of villages across Kenya and compare them to villages that don't get the cash. It'll take a long time to determine the impact. But right now, six months in, you can get a hint from two cousins who are smiling as they check their phones.

DENNIS OTIENO: I got it.

AIZENMAN: Dennis Otieno is a 36-year-old father of four. He holds up his phone to show his new balance.

D. OTIENO: Thank you.

AIZENMAN: Next to him is 30-year-old Dancan Odero, who is single, kind of shy but just as pleased as he clicks through his phone.

DANCAN ODERO: I'm more happy.

AIZENMAN: For each of them, the money has already proved life-changing but in totally different ways. I catch up with Dennis Otieno one morning in a field by his house as he slashes off tree branches with a machete. He's going to burn the wood to make charcoal.

Otieno is an entrepreneurial kind of guy who all his life has been striving to climb out of poverty. He's tried being a mechanic, a fisherman, starting a bar. Nothing's worked. And finally there's this charcoal making.

D. OTIENO: I'm just going to carry those, go to the burning place there.

AIZENMAN: Sweat pours off him as he heaves the logs onto the burn pile. The process will take two days, after which he'll have enough charcoal to sell for at best $5.

D. OTIENO: Heavy work.

AIZENMAN: So the combined $44 a month Otieno and his wife have been getting from the charity is boosting their income by as much as 50 percent. The benefits - his 2-year-old daughter Gloria - she's healthy, full of pep. She used to cry all the time because she was hungry. Now Otieno can guarantee her solid food every day. She picks up a stick, pretends it's a machete. Which are your cuttings, Otieno asks her, speaking the local language, Dholuo.

GLORIA: (Speaking Dholuo).

D. OTIENO: (Laughter).

AIZENMAN: "These," she says, pointing at some leaves. Longer-term, Otieno has even more ambitious plans for his kids.

D. OTIENO: Well, I'm thinking of putting up a forest.

AIZENMAN: A forest of eucalyptus trees. They're used as lumber in construction. Every month, Otieno has been setting aside $10 of the charity money to save up for saplings. They should be big enough to sell in five years. He wants to use the money to put all four of his kids through high school.

D. OTIENO: Yes.

AIZENMAN: And that's basically going to be your children's high school tuition.

D. OTIENO: Yes, that's going to be their bank.

AIZENMAN: Their bank account and maybe more. Otieno hopes this venture will be the one that finally boosts his family out of poverty so that 12 years from now when the money from the charity stops flowing, they won't need it. Now to Otieno's cousin Dancan Odero, the young, single guy. He's had a different experience. When I catch up with him, he's also hacking at branches. This field belongs to his elderly aunt. He's clearing underbrush while he chats with her.

ODERO: (Speaking Dholuo).

AIZENMAN: She looks worried. Odero has epilepsy. Working in the sun is risky.

UNIDENTIFIED WOMAN: (Speaking Dholuo).

AIZENMAN: "I'm scared he could have a seizure right here," she says.

UNIDENTIFIED WOMAN: (Speaking Dholuo).

AIZENMAN: Have you seen him fall down like that?

UNIDENTIFIED WOMAN: (Speaking Dholuo).

AIZENMAN: "Yeah," she says, "many times, but he insisted on helping." Odero's family says he's constantly trying to prove he can be useful, be independent. But people hesitate to hire him for even odd jobs. He'll go out with the other young guys to look for work, then watch as everyone gets picked but him. Back at his house, he says...

ODERO: (Through interpreter) It makes me so frustrated. I start shaking, and I feel like crying, but I just keep it inside.

AIZENMAN: With no real income of his own he's had to rely on his mother and siblings to pay for even food, let alone his medication. And his sister Betty says he so hates having to keep asking for money that there were times he wouldn't even tell them he was out of epilepsy drugs.

BETTY: (Speaking Dholuo).

AIZENMAN: They'd just notice his attacks were getting more frequent and realize...

BETTY: (Speaking Dholuo).

AIZENMAN: ...Oh, he's got no medicine. But these days, Odero says he can use the new charity money to buy his meds.

ODERO: (Speaking Dholuo).

AIZENMAN: He takes them out...

ODERO: (Through interpreter) These ones are known as phenobarb.

AIZENMAN: ...Handling them very carefully. They eat up a third of his monthly payment. Still, he's had enough left over to save up for something just as precious to him - a sofa and two armchairs. See; in the village, when a guy reaches adulthood, he builds himself a house on his parents land, a mud hut with a living area and sleeping nook. But Odero never had the money. It wasn't until a year ago that his brothers built one for him. Even then, he had no furniture. He says buying that sofa set was important so that when guests came to visit...

ODERO: (Through interpreter) I wouldn't be ashamed.

AIZENMAN: Now, unlike his cousin Dennis Otieno, Odero has no scheme for how to use the charity income to make more money, no plan for the day the money will stop coming.

Do you worry that at that point, you will be back to where you were before?

ODERO: (Speaking Dholuo).

AIZENMAN: "Yes," he says. "I think I might." Is that a problem? Michael Faye, the chairman of GiveDirectly, says not necessarily.

MICHAEL FAYE: We would obviously hope cash has the long-term impact.

AIZENMAN: But he points out that nonetheless, every year, the world spends billions on food and other traditional aid for desperate people with no expectation it's going to permanently lift them out of poverty. And he says it would be enough for this experiment to show the value of just giving those people cash.

FAYE: Let them make the choices. The poor are pretty good at making them.

AIZENMAN: Only they can know the specific ways poverty does its damage. For Odero, what poverty really stole from him was his dignity, and the couch set is what's given it back. Now when he invites people over, he has a place for them to sit in.

ODERO: (Through interpreter) Now I can be seen as a human being.

AIZENMAN: And for practical, go-getter Otieno, it's late afternoon. Otieno and his wife, Bentah, are sitting in their hut, calculating their budget for the month.

BENTAH OTIENO: (Speaking Dholuo).

D. OTIENO: (Speaking Dholuo).

AIZENMAN: They never used to talk money - too stressful. And the silence had creeped into the rest of their relationship. But now figuring out how to spend the charity windfall has become this hopeful joint project, and it's got them doing other fun stuff together.

D. OTIENO: Walk around the village, pairing hands. It's like we married the other day.

AIZENMAN: You're like newlyweds.

D. OTIENO: Yeah, right.

AIZENMAN: Like newlyweds, he says.

D. OTIENO: (Laughter).

AIZENMAN: Nurith Aizenman, NPR News.

(SOUNDBITE OF DJ JAZZY JEFF AND DAVE GHETTO SONG, "COME ON")

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