Published on Development Impact

Cash Transfers Increase Trust in Local Government

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Update (January 22, 2019): The paper discussed in this post has subsequently been published in the journal World Development. 

Cash transfers seem to be everywhere. A recent statistic suggests that 130 low- and middle-income countries have an unconditional cash transfer program, and 63 have a conditional cash transfer program. We know that cash transfers do good things: the children of beneficiaries have better access to health and education services (and in some cases, better outcomes), and there is some evidence of positive longer run impacts. (There is also some evidence that long-term impacts are quite modest, and even mixed evidence within one study, so the jury’s still out on that one.)

In our conversations with government about cash transfers, one of the concerns that arose was how they would affect the social fabric. Might cash transfers negatively affect how citizens interact with each other, or with their government? In our new paper, “Cash Transfers Increase Trust in Local Government” (can you guess the finding from the title?) – which we authored together with Brian Holtemeyer – we provide evidence from Tanzania that cash transfers increase the trust that citizens have in government. They may even help governments work a little bit better.

What did you expect to happen?
The impacts of cash transfers – particularly conditional cash transfers – could go either way. On the one hand, they suggest to beneficiaries that the government cares about their welfare. They also provide exposure to public sector institutions, which – depending on how well those work – could improve people’s perceptions of their value. On the other hand, exposure to poorly functioning public sector institutions could reduce trust in government, and conditions imposed on beneficiaries could conceivably induce resentment toward the government. Participation could even carry a stigma which could reduce appreciation of the program. What’s the net effect? It’s ambiguous!

What actually happened?
The Government of Tanzania rolled out a pilot conditional cash transfer program beginning in 2010. The program was conditioned on school enrollment and attendance as well as health clinic visits for children, and health clinic visits for the elderly. We worked with them to randomize the roll-out in half of a set of 80 villages. Reaching all villages from the outset was impossible due to budget constraints. Before the program, the villages receiving the program looked very similar to the villages who had to wait. This program was largely implemented at the local level, with local leaders playing a major role in identifying needy households, checking that households met the conditions, and distributing transfers. (You can read all about the details of the program in our 191-page report.) In these villages, an elected Community Management Committee administered the cash transfer program. The elected Village Council, which is the main political leadership body in the village, facilitates interactions between the central government and the village at the outset of the program, but does not implement the program directly.

After 2.5 years of transfers, beneficiaries – relative to potential beneficiaries in the waitlisted villages – report a stronger belief that their elected village leaders can be trusted in general, as well as more trust in the elected Village Council and the elected Community Management Committee specifically. They do not report increased trust in the Village Executive Officer, who is an appointed bureaucrat. Beneficiaries are more likely to report that local government leaders take citizens’ concerns into account, and that their honesty has improved over time. They report greater satisfaction with the work of the village council. They initially – after just 1.5 years – report increased satisfaction with schools and health services, although those effects disappear by the end of 2.5 years. Notably, this increased trust does not translate into political activity. Beneficiary households are no more likely to vote in Village Council elections, or attend more Village Council meetings.

We even see some suggestion that the program improves record keeping in the government, at least in areas linked to transfers. Beneficiary villages were much more likely to be able to show committee reports for education and health than were other villages. That record keeping did not spill over to the availability of reports of other committees, such as planning and security.

The importance of information sharing in communities
All of these trust effects are concentrated in villages that – in the year previous to the launch of the program – had held more village meetings. Why does that matter? One of the major roles of village meetings is to disseminate information. Village leaders report on the use of funds collected within the village and the advancement of development projects. They also share information received from the district. Additionally, individual citizens have the opportunity to voice their own opinions and concerns about these activities and decisions.

In these communities, where residents have greater access to information about what their local government is doing and more chance to voice concerns, participating in a safety net program – in this case, the conditional cash transfer program – leads to greater trust in the leaders of that local government.

Over the course of this study, we observe dozens of statistically significant results, out of a larger number of hypotheses. To protect against accidentally interpreting “false positives” as real results, we use a statistical correction (the Benjamini-Krieger-Yekutieli method). Our key findings – that conditional cash transfers increase trust in leaders and improve recordkeeping but don’t translate into political action – hold up.

What does this mean?
Increasing trust in government isn’t inherently a good thing. Some level of skepticism can help citizens to hold their government accountable.

However, the fact that these results are concentrated in communities where residents have more access to information suggests that cash transfer programs can provide the most vulnerable members of society with increased exposure to and information about government services. Without trust, the households that need services the most are less likely to take advantage of the services available through local government.

This post also appears on the IFPRI Research blog


David Evans

Senior Fellow, Center for Global Development

Katrina Kosec

Senior Research Fellow

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