40 | New Scientist | 27 February 2021treatment groups had more assets, better diets,
better physical and mental health, higher
political engagement and increased female
empowerment compared with control groups.
The evidence could hardly be clearer:
a one-off investment gives ultra-poor
people what they need to escape the
poverty trap, very often permanently.
Most of the cash-transfer experiments done
so far are on a scale of hundreds of thousands to
millions of dollars. We don’t know what might
happen if we showered larger amounts on
entire populations. Might people give up work?
It is hard to say, but the little evidence that
exists suggests not. In Alaska, for example,
all residents receive a yearly dividend derived
from oil revenue, and this has no negative
effect on the rate of employment. Nor dosuch cash transfers seem to have much impact
on inflation, judging by a study in Kenya.
What we know for certain is that the benefits
can be huge. In Brazil, a countrywide initiative
called Bolsa Família introduced in 2003 helped
to reduce financial inequality by 15 per cent,
and the proportion of the population in
extreme poverty shrank from 9.7 to 4.3 per
cent. Cases of infant mortality caused by
malnourishment also halved. Payments
from the programme aren’t universal: they are
made only to families earning under a certain
amount, but in 2015 that was still a quarter
of the population, almost 52 million people.Educational value
In Peru, there was a cash transfer scheme
that came with conditions. In enrolled villages,
the female head of households with children
received the equivalent of $143 every two
months if she had been sending the children
to school, had obtained identity cards for them
and had taken under 5s for health checks.
This hints at the kind of lasting change
you can make if you simply give away money,
albeit with the proviso that children are
educated. The non-profit Brookings Institution
in Washington DC discovered that a woman
who has never been to school has around
four to five more children than a woman
with 12 years of education. It also found
that women who went to school earn more,
are less likely to marry as children, are less
likely to have HIV or malaria, and tend to
farm more productive plots of land, which
results in better nourished families.
The United Nations estimates that just
an extra $39 billion per year could ensure
universal education in low and lower-middle
income countries. (The UN currently spends
$13 billion a year on international aid projects
for education.) Universal education, for just
$39 billion a year. It is a shockingly small
amount to ensure a basic human right.
So that is one way to spend a trillion dollars:
$600 billion up front to raise hundreds of
millions of people out of the poverty trap,
which leaves us enough to pay for universal
education in low and lower-middle income
countries for 10 years.A one-off payment
gives ultra-poor people
what they need to
escape the poverty
trap, often permanently
A favela in Rio de Janiero,
where many people live
on less than $1.90 a day“
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