Cash Transfer Evaluation in Malawi

Study Context

Led by Jon Robinson, Jenny Aker, and Alan Spearot, in partnership with USAID and GiveDirectly, researchers are designing a randomized evaluation (RCT) to develop estimates of the cost effectiveness of digital cash transfers of multiple sizes on a wide range of development outcomes relevant to USAID in Malawi. The aim of this exercise is to measure the impact of cash transfers in Malawi. This impact can be compared to current and future USAID programming in this context moving forward.

Study Design

The evaluation is of a randomized cash transfer program with households in 300 villages in Malawi. The value of the transfer was large, averaging $500 (randomly varied between $250, $500, and $750), which is equivalent to about 126% of estimated annual household average expenditure in Malawi. The team implemented bi-monthly panel phone surveys with 20% of the sample (spanning the universe of sampled villages) that collected data on a number of outcomes. outcomes. The analysis focused on four outcomes that were pre-specified and which were measured in both phone and in-person surveys: food security, expenditures, income, and transfers. The team supplemented the phone surveys with an in-person endline survey administered about 18-25 months after cash had been disbursed, which measured the outcomes listed above as well as other key pre-specified outcomes, including psychological well-being, assets and wealth, intimate partner violence (IPV), household resilience, and agricultural input usage.

Results and Policy Lessons

Food security increased by 0.5 standard deviations for the first few months after disbursement, but the treatment effect later attenuated to about a half of its original size within eight months, remaining at that level for two years. Expenditures increase dramatically immediately post-disbursement (food expenditures double while non-food expenditures triple), but the treatment effect falls to being indistinguishable from zero within 8-10 months. The analysis reveals no effect on non-agricultural income. Researchers observed no effect on transfers sent at any point. At endline, the study found no effect on expenditures, transfers, or income, but did find lasting effects on food security. The study also found that the cash transfers have substantial and significant improvements on other economic and psychological measures of well-being. Non-land wealth increased by 25-30%, psychological well-being improved by 0.1-0.3 SD, and households’ resilience to shocks improved by 0.1 SD, spending on agricultural inputs increases by 16%. Finally, the team documents a sizable reduction in households’ likelihood of being employed as a casual laborer and an associated decrease in casual labour hours.