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Food or Cash? New study adds nuance to the debate over transfer programs

What makes a more effective social safety net program: transfers of food, or cash? The question is hardly academic. Governments, international agencies, and non-governmental organizations must decide whether to provide the world’s poorest people with cash, food, or a mixture of the two. In recent years, many have begun favoring cash transfers over food aid. Cash transfers are cheaper, require less administrative capacity, and allow poor households to decide how the money should be spent. But are they always the most effective means of improving the lives and livelihoods of the ultra-poor?

Researchers at the International Food Policy Research Institute (IFPRI) studied four programs that provided food, cash, or a combination of food and cash to very poor communities in Bangladesh. They compared the programs’ effectiveness at improving the food security and livelihoods of particularly vulnerable populations, and considered how the benefits were divided among men, women, and children within households. They found that cash transfers were more successful at producing certain outcomes, while food transfers were best for achieving others.

For example, if the goal is women’s empowerment, cash payments in the form of wages paid to women were most effective at improving their ability to make decisions and mobilize household assets. For sustained poverty relief, those programs that combined food or cash transfers with access to credit or savings requirements had the greatest impact in the long run.

However, many women said they preferred food transfers to cash, citing worries that their husbands would spend the money on non-food items. The study found that if women’s nutrition is the objective, then transfers of atta (whole wheat flour), as opposed to rice, are preferable. Because atta is considered less desirable than rice, less of it was stolen in transit and women consumed more than they did when transfers were given in the form of rice. Atta was also more easily enriched with other nutrients.

Researchers concluded that cash and food transfer programs should be developed in light of specific goals, including cost-effectiveness, nutritional impact, gender-specific outcomes, and long-term poverty reduction.

The research monograph, “Comparing Food and Cash Transfers to the Ultra Poor in Bangladesh,” encourages policymakers to consider the specific objectives of social safety net programs before assuming that food or cash is always the answer.

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