Just give people money. With sluggish wages and household savings eroded by the pandemic, many struggling households simply need cash. Giving cash has turned out to be a powerful policy tool—its use is flexible, and households can spend it on their most pressing needs, whatever those are. But not all money is the same. The amount matters, obviously, but the timing matters too. Having the right amount of money at the right time, for example, could be the difference between maintaining housing and experiencing homelessness.
A group of mayors in the United States has launched pilot programs that provide households with regular cash transfers. Unlike universal basic income, the money is targeted only to low-income residents, delivering $500 to $1,000 per household each month. For some households, however, a steady flow of payments (perhaps $100-$250 every week) would be more helpful in keeping bills paid and food on the table. If instead the goal is to foster large investments and build assets, or protect from unpredictable or unavoidable harms, a single $5,000 check is more likely to go toward big expenses.
This talk brings together lessons from household finance and policy on cash transfers. The focus is on distinguishing between flows and lumps, and building policy around the distinct saving and liquidity challenges faced by low-income households.
Jonathan Morduch is Professor of Public Policy and Economics at the Wagner Graduate School of Public Service at New York University. Morduch's research focuses on finance, poverty, and inequality. He is a founder and Executive Director of the NYU Financial Access Initiative. Morduch has taught on the Economics faculty at Harvard, and has held visiting positions at Stanford, Princeton, Hitotsubashi University and the University of Tokyo. He received a BA from Brown, Ph.D. in Economics from Harvard, and an honorary doctorate from the Free University of Brussels for his work on microfinance.
Michal Rutkowski is the Global Director for Social Protection and Jobs – overseeing the World Bank’s work in developing systems that protect the poorest and vulnerable from crises and shocks, and supporting private sector-led growth. Until July 2016, he was the Director for Multilateral Organizations, and prior to that the Country Director for the Russian Federation and the Resident Representative in Moscow for three years. Mr. Rutkowski joined the World Bank in 1990. He was a country economist for the Russian Federation between 1995-1996, and after taking a brief leave from the Bank, returned as Sector Manager for social protection between 1998-2004, where he led a team of professionals working on pensions, labor market and social assistance reforms in 28 countries of Central and Eastern Europe and former Soviet Union, as well as in Turkey.
Eeshani Kandpal is a Senior Economist in the Development Research Group of the World Bank. Her research agenda lies at the intersection of two themes. The first is that average treatment effects often mask the widely divergent impacts of development policy, like health interventions, cash transfers, and empowerment programs. Unintended consequences may bolster or undermine the intended goals of the policy, but economic theory and evidence can help us predict where such consequences may arise. A second theme of her research is that inequality in access to government services or social capital often varies by attributes like gender, wealth, and ethnicity or caste. The conjunction of these two themes, and particularly how public policy interacts with preexisting inequality, is where she situates her research.
