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Submitted by Shanta on

Erinda: Thank you for your thoughtful comment. The question you ask, how people spend their cash transfers, is exactly the one that the many impact evaluations of these schemes attempt to answer. For example, the study by Berk Ozler and colleagues (cited in my blog post) shows that, in Malawi, there were fewer teen pregnancies among those who received unconditional cash transfers or UCTs (compared with those who received conditional cash transfers [CTs], where the condition was staying in school). Even though there was a higher dropout rate among those receiving UCTs, the cash appears to have enabled them to prevent early pregnancy. More generally, the vast literature on how people spend cash transfers indicates that they do so in a manner that those giving the transfers would approve of. So the main argument for conditional cash transfers is political: Rich people are more likely to vote for cash transfers to the poor if they think that it will be used to send children to school and clinics and thereby build the next generation. Shanta