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Submitted by Shanta on

Theresa, thank you for your thoughtful comments. Just two points. First, you are right to question whether conditions actually contradict our notions of consumer sovereignty or the basic fact that parents often know what's best for their children. In fact, my friend and former colleague Lant Pritchett created a storm about a year ago when he pointed out that CCTs are actually harming families that are forced to send their kids to school, where they are often abused, because that was the only way the family could get the grant (
Secondly, your point that CTs should be accompanied by other reforms to correct market (and government) failures is, of course, correct. But if a government has not corrected a market or government failure before, why do we think they would in the presence of CTs? Do you think the increased demand from citizens will mobilize them into action? The evidence is mixed. In fact, what we do see is a private-sector response (e.g., private schools cropping up) in response to the increased demand. My own view is that the objections to cash transfers are usually an indicator of who is earning the rents from the current system of public expenditures. So we learn a lot by proposing cash transfers and watching the debate. Once we know who is earning the rents, perhaps we have a better chance of reforming public expenditures by targeting these people and trying to reduce their rents. And public support from those receiving the cash transfers could help in this campaign. Best regards, Shanta