cash transfers

There's this fundamental question in economics that has proven really hard to answer: What's a good way to help people out of poverty? The old-school way was to fund programs that would support very particular things, like buying cows for a village, giving people business training, or building schools.

But over the past few decades, there has been a new idea: Could you help people who don't have money by ... just giving them money? We covered this question in a segment of This American Life that originally ran in 2013. Economists who studied the question found that giving people cash had positive effects on recipients' economic and psychological well-being. Maybe they bought a cow that could earn them money each week. Maybe they could replace their grass roofs with metal roofs that didn't need fixing every so often.

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YOU can boost your happiness and transform the lives of people in one African village with a cash gift by going to givedirectly.org/happiness

Giving money to others makes you happier than spending the same cash on yourself. That's been proved by science. But new research also shows that giving people in need cold hard cash is an amazing way to help them improve their lives. We explore why trusting people to help themselves is a cheaper and more effective way to solve poverty - and hear about Kibobo in Rwanda, where any money you donate will have a huge impact.   

Read more about Kibobo at givedirectly.org/happiness  

Former British politician Rory Stewart used to manage billions of dollars in aid money - and like other international donors thought poor people needed to be told what to do with charitable gifts. He was shocked how effective no-strings-attached cash turned out to be, and now promotes "giving directly". He was also surprised how good giving away even small amounts of money made him feel.  

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We’re taking a look at some of our favorite moments from the 2021 Fast Company Innovation Festival. Here’s a conversation about how good economics can help us rebuild equitably with Nobel Prize-winning economists, Abhijit Banerjee and Esther Duflo. Banerjee is the Ford Foundation International Professor of Economics at MIT and Duflo is a professor of poverty alleviation and development economics at MIT.