The Universal Basic Income experiment in Kenya | Planet Money

Intro

In this episode of Planet Money, titled “The Universal Basic Income experiment in Kenya,” the podcast explores the concept of giving money directly to people in need without any strings attached. It revisits a major study conducted by the nonprofit Give Directly in 2013, where cash was given to over 500 households in rural Kenya. The episode provides firsthand accounts from recipients and examines the impact of direct cash transfers on poverty alleviation.

Main Takeaways

Traditional Approaches vs. Direct Cash Transfers

• The old school approach to poverty alleviation involved funding specific programs like buying cows, providing business training, or building schools.
• The idea of giving money directly to people without any strings attached has gained traction in recent decades, with the belief that individuals know their own situation best and can decide how to use the money effectively.

Implementation of Direct Cash Transfers

• Economists are exploring the best ways to implement this idea, including whether to give money all at once or over time through a universal basic income.
• A recent study on giving cash has yielded valuable insights on the most effective ways to provide money to those in need.

Impact of Cash Transfers in Kenya

• The podcast revisits a major study conducted in 2013 by the nonprofit Give Directly, which involved giving cash to over 500 households in rural Kenya.
• The podcast provides firsthand accounts from a village in Kenya where residents received money, highlighting the impact of the cash transfer on individuals’ lives.
• People in the village received their first payment from GiveDirectly, and it had a significant impact on their lives.

Choices and Outcomes

• Participants in the study used the cash to purchase essential items such as motorcycles for transportation and tools for small businesses.
• The purchase of metal roofs to replace grass roofs was a significant improvement in living conditions and provided financial stability for the future.
• While some people made smart choices with the money, others misused it, not investing in homes or using it for alcohol and food.

Exploring Universal Basic Income

• The concept of universal basic income (UBI) is being studied as a potential method to help people out of poverty.
• A study is being conducted to compare the effectiveness of giving everyone in a village small regular monthly payments (UBI) versus giving everyone one big lump sum all at once.
• The initial results showed that the lump sum approach seemed more effective in lifting people out of poverty.

Summary

The Power of Direct Cash Transfers

The podcast explores the shift from traditional approaches to poverty alleviation to giving money directly to individuals. It highlights the belief that individuals know their own situation best and can make effective decisions on how to use the money. The study conducted by Give Directly in rural Kenya provides valuable insights into the impact of direct cash transfers on poverty alleviation.

Impact on Lives and Choices

Through firsthand accounts from recipients, the podcast showcases the significant impact of cash transfers on individuals’ lives. The money received allowed people to purchase essential items such as motorcycles for transportation and tools for small businesses. The purchase of metal roofs provided improved living conditions and financial stability for the future. However, some individuals misused the money, highlighting the importance of financial education and support.

Exploring Universal Basic Income

The concept of universal basic income (UBI) is being studied as a potential method to help people out of poverty. A study conducted in Kenya compares the effectiveness of giving small regular monthly payments versus one big lump sum all at once. Initial results suggest that the lump sum approach may be more effective in lifting people out of poverty. However, further research is needed to assess the long-term effects of monthly payments.

Conclusion

The podcast episode “The Universal Basic Income experiment in Kenya” sheds light on the power of direct cash transfers in poverty alleviation. It emphasizes the importance of giving individuals the agency to make their own decisions on how to use the money. The study conducted in Kenya provides valuable insights into the impact of cash transfers on individuals’ lives and the potential effectiveness of universal basic income. By exploring different approaches to giving money, economists and organizations like Give Directly are working towards finding innovative solutions to combat poverty.