Cash transfers and child health

Cash “handouts” to poor people are a contentious issue. The proposed BIG (basic income grant) in South Africa has come in for a lot of opposition, mainly from people who believe that handouts increase dependency and do nothing to stimulate entrepreneurship. While this may be the case in some instances, a recent publication in The Lancet suggests that, in the programme in Mexico at least, cash injections have made a major difference to child health outcomes among poor people.

In fact, across the developing world, many governments have introduced conditional cash transfer (CCT) programmes with the goal of improving options for poor families through interventions in health, nutrition and education. This is particularly the case in Latin America. In traditional cash transfer programmes, families receive cash benefits because they fall below a certain cutoff income or live within a geographically targeted area. However, a CCT brings, with the cash, conditions – the families only receive the money if they comply with certain requirements, such as mandatory attendance at preventative health-care facilities and health and nutrition sessions aimed at promoting behavioural change. Some programme require school attendance by school-age children. The idea is not simply to provide cash; it is to provide education and a gradual change in lifestyle, investing in human capital in order to bring about long-term changes in economic circumstances.

This study, published in The Lancet, aimed to separate out the benefits of the actual cash involved with the other benefits of the programme in terms of education and health. The authors used an intervention that began in Mexico in 1998, among low-income families who were randomly assigned to be enrolled in CCT programmes. In 2003, children who had been on the programme their entire lives were assessed for a variety of outcomes. What researchers found was that a doubling of cash transfers improved children's height and that fewer children were stunted. And fewer children became overweight – a problem among the poor in Mexico. A doubling of cash transfers was also associated with improved motor, language and cognitive development.

The message is clear. Increase the amount of cash a family has – independently of any other intervention – and you have better child health.