Why Don’t We Trust the Poor Enough to Give Them Money?

A Chinese millionaire tried to give $300 to homeless men and women in New York last week. This didn’t sit well with the nonprofit New York City Rescue Mission. The Rescue Mission offered to help with lunch but wouldn’t cooperate in handing out cash. So midway through a meal, some 200 homeless people discovered that they would not be getting money. Instead, the Rescue Mission would accept $90,000 on their behalf. You can imagine the anger and humiliation.

The millionaire, recycling tycoon Chen Guangbiao, wanted to set an example of generosity in the world’s financial capital. The Rescue Mission’s director said he was worried that people might spend the handout on drugs or alcohol. This pessimism (and paternalism) is common and understandable. But evidence from other countries suggests we should be more optimistic.

Globally, cash is a major tool to fight extreme poverty. The U.N. is handing out ATM cards to Syrian refugees alongside sacks of grain. The evidence suggests these cash programs work. There have been randomized trials of cash grants to poor Mexican families, Kenyan villagers, Malawian schoolgirls and many others. The results show that sometimes people just eat better or live in better homes. Often, though, they start businesses and earn more.

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Article Credit
“Why Don’t We Trust the Poor Enough to Give Them Money?”
By Christopher Blattman
The Dallas Morning News 4 July 2014