The interaction effect between cash transfer and the program is important but very unclear. One would think that if the program is more cost-effective than the transfer, then you should just do the program. And if the transfer is more cost-effective than the program, then you should just do the transfer. So there must be some reason for combining the two for it to make sense to do both. Does giving cash boost participation rates? …Probably yes, but enough to still be more cost-effective?
The interaction could require a worse program and/or a worse transfer. Along similar lines, if you’re pairing a program with a transfer, it’s possible that the program that pairs best does not actually outperform just doing the best program with no transfer. Also, it’s possible that the particular program you pick may require you to make transfers to people other than those that would be the most helped by an unconditional transfer.
Combining a program with a transfer compounds the benefits of the program and transfers, but also compounds their risks. You get all the potential risks of the program plus the risks of the transfers (e.g., making other people in the village envious).
Conditional transfers may perform significantly differently than non-conditional transfers. Do people feel less happy because they’re not receiving a surprise windfall? Is jealously from other villagers reduced because the money seems earned? Do recipients spend their money less wisely because they feel that they rightfully earned it and that they’re not being monitored?
Cash transfers may require large regulatory and logistic hurdles that slow down an otherwise implementable program. Also, the costs of doing the program may slow down an otherwise implementable transfer scheme. And the logistic hurdles of trying to do both a program and a transfer may be really hard.
Some potential concerns I can think of:
The interaction effect between cash transfer and the program is important but very unclear. One would think that if the program is more cost-effective than the transfer, then you should just do the program. And if the transfer is more cost-effective than the program, then you should just do the transfer. So there must be some reason for combining the two for it to make sense to do both. Does giving cash boost participation rates? …Probably yes, but enough to still be more cost-effective?
The interaction could require a worse program and/or a worse transfer. Along similar lines, if you’re pairing a program with a transfer, it’s possible that the program that pairs best does not actually outperform just doing the best program with no transfer. Also, it’s possible that the particular program you pick may require you to make transfers to people other than those that would be the most helped by an unconditional transfer.
Combining a program with a transfer compounds the benefits of the program and transfers, but also compounds their risks. You get all the potential risks of the program plus the risks of the transfers (e.g., making other people in the village envious).
Conditional transfers may perform significantly differently than non-conditional transfers. Do people feel less happy because they’re not receiving a surprise windfall? Is jealously from other villagers reduced because the money seems earned? Do recipients spend their money less wisely because they feel that they rightfully earned it and that they’re not being monitored?
Cash transfers may require large regulatory and logistic hurdles that slow down an otherwise implementable program. Also, the costs of doing the program may slow down an otherwise implementable transfer scheme. And the logistic hurdles of trying to do both a program and a transfer may be really hard.