Conditional Cash Transfers

This is one of our charity profiles, where we present our shallow, preliminary research on a potential, promising charity idea. We believe that this idea could be a potential contender for a GiveWell top charity, if further research confirmed the idea and if someone started the charity, executed it well, and resolved some of our outstanding questions and reservations

Basic idea ​ Incentivize positive behavior with conditional cash transfers (CCTs) in lower and middle-income countries (LMIC). Summary Cost-effectiveness: Low-High -- Cost-effectiveness will largely be determined by specific behaviour incentivised and the extent to which the incentive is successful. The added benefits of the transfer on income will also play a part in overall cost-effectiveness. Strength of Evidence: Medium -- A significant number of studies have explored a variety of potential behaviors that could be incentivized. However, the variation in CCTs -- in incentive delivery and amount, and which action is incentivized -- calls for a larger amount of research. We have some recent research on the evidence of different interventions within CCTs. Counterfactual Scalability: Medium -- There are no major funders or organizations in this specific area. However, because of the growing popularity of cash transfers, the field may become more crowded. Ease of Testing: High -- It is relatively easy to perform a randomized controlled trial for a CCT, though ease may vary according to intervention specifics. Flexibility: Medium -- It seems limited work would be required to shift a CCT program incentivizing one behavior to incentivizing a different behavior. A conditional cash transfer charity also seems like it would be able to update on new information at a faster rate and to a greater extent than charities in most other intervention areas. Logistical Possibility: Medium -- Some challenges associated with this specific charity idea are identifying an ideal targeting approach, a reliable and convenient cash transfer system, and a preferred monitoring method. Why We Think This Could be an Effective Opportunity CCTs entail giving someone a cash incentive for completing a certain activity. CCTs can incentivize behavior that improves wellbeing while also improving well-being by increasing wealth. GiveDirectly, a GiveWell top charity, has a well-evidenced, high-impact intervention through unconditional cash transfers (UCTs), where money is unconditionally given to some of the world’s poorest (see GiveWell’s review of GiveDirectly). A CCT seems like it may be able to achieve higher cost-effectiveness than UCTs by successfully incentivizing highly valuable health behaviors. However, the beneficial effects of the cash transfer may be much lower than in the UCT since the ability to target the poorest is compromised. There are numerous behaviors that could be incentivized and many different incentive sizes and delivery methods. Additionally, it is easy to randomly assign participants to different conditions, including a control condition. Thus, there’s much room to experiment with CCTs, which makes it a flexible, testable and possibly cost-effective intervention class. CCTs for Healthcare Utilization Akresh, et al. (2012) reported that CCTs to incentivize quarterly childhood growth monitoring resulted in significantly more clinic visits than an UCT control group. Rai (2014) reported that Kenya’s traditional birth attendant encouragement program increased the number of clinic births and Lim, et. al (2010) reported a similar result for a large scale Indian program. Lagarde, Haines, and Palmer’s (2009)’s Cochrane review also suggested CCTs could be used to increase health care utilization. However, we’re concerned about the quality of some clinics (Fraker, et. al., 2013, Chapter 3) which may provide minimal health services, though we think this concern could be somewhat mitigated by selecting clinics that score well on evaluations (see ICDS, 2015; Lee, Madhaven, & Bauhoff, 2016). CCTs for Healthcare Worker Performance There are some areas of standard healthcare worker performance that if incentivised correctly might increase health outcomes. For example, Banerjee, Duflo, and Glennerster (2008) reported as many as 35% of healthcare workers were absent on a given day, while Chaudhury, et. al. (2006) estimated a 43% Indian medical worker absenteeism rate. Also, workers that are present may be low skilled, with one survey suggesting 67% of Indian healthcare providers had no formal medical qualifications (Das, et. al., 2012). There are some concerns CCTs based on patient outcomes create perverse incentives (rejecting sick patients, gaming hospitalization admission dates, etc.) but we think there are reasonable ways this can be avoided. Some apparently successful trials involved performance pay among a fixed beneficiary population (Miller & Babiarz, 2013). Other trials have focused on incentivizing community health workers, who generally lack medical training, to refer patients to hospitals under certain conditions (Rai, 2014). Another interesting program adopted a mystery shopper method, paying based on observed quality of healthcare given to people pretending to be customers (Wilson, Morris, & Gilbert, 2012). However, systematic reviews have suggested the general state of evidence for “pay for performance” in LMIC to be relatively low (Witter, Fretheim, Kessy, & Lindahl, 2012; Grittner, 2013; Gopalan, Mutasa, Friedman, & Das, 2014; Das, Gopalan, & Chandramohan, 2016). CCTs for Increasing Immunizations Immunizations have a strong evidence base for cost-effectively improving health (see GiveWell’s page on immunizations and DCP3) and a major reason for people with partial immunizations or lacking immunizations is a problem of demand (Rainey, et. al., 2009, Megiddo, et. al., 2014; see also The Wire Magazine and Live Mint Magazine) and a lack of knowledge in particular (Nath, Kaur, & Tripathi, 2015). This creates an opportunity to increase IC by increasing demand, leveraging the existing supply of vaccines. While inadequately trained health workers could be addressed with CCTs for healthcare worker performance, immunizations could also be increased through CCTs providing a cash incentive to increase immunization demand (see Barham & Maluccio, 2009; Banerjee, Duflo, Glennester, & Kothari, 2010; Chandir, et. al., 2010; Sato, 2015). A Possible Implementation Plan We think that a good way of implementing CCTs would be to explore the range of CCT implementations further before making an initial commitment to a particular form. If we were to do this idea we lean towards piloting many different CCT approaches, varying transfer size, transfer mechanisms, enforcement mechanisms, participant recruiting strategies, and the behavior promoted. This seems relatively feasible given Haushofer & Shapiro (2013) were able to experiment with recipient gender (wife vs. husband), transfer timing (lump-sum transfer vs. monthly installments over 9 months), and transfer magnitude (USD 404 vs. USD 1,520) in one study. Who is Already Working in this Area? CCT programs are most frequently implemented by governments. Evans, Holtemeyer, and Kosec (2015) note that CCT programs are present in almost every Latin American country and in over a dozen African countries. For example, by 2011, CCTs had spread to 18 countries in Latin America, with as many as 129 million combined beneficiaries (Stampini & Tornarolli, 2012, p3). The biggest non-profit we know of implementing CCTs is New Incentives, which incentivizes prevention of mother to child transmission (PMTCT) of HIV by incentivizing birth in clinics, antiretroviral adherence, and HIV screenings for newborns. GiveWell concluded that “there appears to be strong independent evidence that CCTs and PMTCT are effective programs” and that “New Incentives' PMTCT CCT program could potentially be in the same range of cost-effectiveness as our top charities” (GiveWell review of New Incentives). VillageEnterprise provides CCTs for entrepreneurs, giving $150 to each three-person new business founded by someone in extreme poverty with no prior business experience. TrickleUp also seems to provide CCTs for entrepreneurs, though they have a more complex model. Reservations Logistics The logistics of running a CCT may be challenging. Lahariya, et. al. (2011) found that poor planning, lack of public awareness, and the risk of corruption were non-trivial challenges to implementing a CCT. Dr. Bhargava notes lack of public awareness, targeting errors, execution gaps, payment errors, inadequate dispute resolution, inadequate service quality, and unclear graduation processes as the “Seven Deadly Sins in Conditional Cash Transfer Programs”. Additionally, a more simple problem may just be availability of bank accounts to transfer cash, which may be a problem in India (The Wall Street Journal, 2012; Indian Express, 2015; TechVibes, 2015) and other countries. Warping Incentives We also think a badly done CCT could warp incentives negatively, incentivizing the wrong behavior and producing net negative results. For example, Singh, et. al. (2015) found that low remuneration for community health workers could undermine their intrinsic motivation and foster discontent. a CCT for healthcare visits could incentivize frivolous clinic visits solely so people could get into the program. Also, a CCT for healthcare performance could lead to hospitals denying treatment to patients who would be most likely to reduce patient care metrics. It could be difficult to craft and enforce an incentive structure to lessen the possibility of these unintended effects. We are also concerned about the possible tendency of cash incentives to erode intrinsic motivation for the action in question, which could have negative long-term effects. For example, This effect of incentives on intrinsic motivation has been found by multiple meta-analyses (Tang & Hall, 2006; Marianne & Marteau, 2013; Cerasoli, Nicklin, & Ford, 2014), but it’s unclear if it would generalize to CCTs for health behaviours in LMIC. We would like to survey the literature more and even see long-term studies of the effects of CCTs to assess this concern’s validity. Cost-effectiveness Another potential worry is CCTs may take too much of a middle-ground approach and end up not be as cost-effective as either direct work on the behavior incentivized or an unconditional cash transfer. For example, using incentives to improve immunization rates may be more expensive than other methods to increase immunization rates, like SMS reminders. The cost of the transfer as well as the compliance monitoring to ensure the transfer is merited may get expensive, relative to just administering the program. More precise cost-effectiveness estimates would have to be made on particular CCT programs in order to assess this effect. There may also be degraded impact from the transfer itself, since it is possible (though not backed up one way or another by any studies we know of) that those with access to a particular CCT intervention may be more wealthy than those without access to that intervention, which would decrease the impact of the wealth transfer by a significant amount[1]. We’re not sure how much the relative cost-effectiveness of the incentivized behavior would be relative to the wealth transfer, though we expect generally that uptake in the behavior to be more impactful. Remaining Questions

1. How poor will the participants of the CCT be compared to the poorest that can be targeted by a UCT? How much will this affect the impact of the cash transfer?

2. Can CCTs be competitive with direct health interventions that don’t use incentives?

3. How much do cash transfers negatively impact intrinsic motivations? What long-term effects might this have?

4. How hard is it to test a particular CCT condition? How easy is it to change conditions between tests?

Endnotes [1]: We roughly approximate the impact of a wealth transfer by how much it increases the log (base 2) of the income of the person receiving the wealth, on the principle that wealth has a log-relationship with happiness (Stevenson & Wolfers, 2008). However, we admit that there is a weakness in this approximation since it is not clear whether this doubling effect applies to very low levels of income. However, if the doubling effect is true and if an extremely poor person targeted by a UCT earns $1/day but a poor person targeted by a CCT earns $4/day, a UCT transferring $100 would have ~3x more impact than the CCT.