Shaping Cash Transfer Impacts Through ‘Soft-Conditions’: Evidence from Lesotho†

Abstract

Cash transfer programmes have been shown to have positive effects on a variety of outcomes. While much of the literature focuses on the role of conditionality in achieving desired impact, this paper focuses on the role of 'soft conditionality' implemented through both 'labelling' and 'messaging' in evaluating the impact of the Child Grants Program in Lesotho, an unconditional cash transfer programme targeting poor households with orphans and vulnerable children. Beneficiary households received a clear message that the transfer should be spent on the interest and needs of children. Our findings suggest that 'soft conditionality' does play a role in increasing expenditure for children, especially on education, clothing and footwear. Results indicate in fact that transfer income is spent differently from general income as it exerts both an income and a substitution effect. This behavioural change is confirmed by comparing the ex-ante expected behaviours with the ex-post actual response to the programme. We find that for expenditure categories linked to the well-being of children the expost response was much higher than the ex-ante expected behaviour.

'There is no point giving cash to women who don't spend it the way they are told to spend it' – Exploring women's agency over cash in a combined participatory women's groups and cash transfer programme to improve low birthweight in rural Nepal

“…We believe the process through which women were encouraged to spend cash on their own nutrition most closely resembles the experience of a cash transfer programme in Lesotho (Pace et al, 2016, 2018) in which complementary labelling and messaging components spurred communities to police beneficiary spending of cash transfers against perceived waste. In our case, NGO staff were motivated to create and enforce spending recommendations for our cash transfers by fears that household members would fail to see their potential value for women's pregnancy and so confiscate them for their own purposes.…”

“…Such constraints can be viewed as a form of ‘soft conditioning’ on transfer use (Pace et al, 2016, 2018; Skovdal et al, 2013). ‘Hard’ conditions refer to formal requirements for continued receipt of cash transfers which are enforced by an external implementing agent.…”

“…A notable exception is the literature on ‘labelling’ effects, which studies the effect of providing clear messages to beneficiaries about the purpose of cash transfers (Benhassine et al, 2015; Pace et al, 2016, 2018; Kilburn et al, 2017). Households often do not treat all income as fungible, but over-spend cash labelled with a specific purpose on their perceived purpose as compared to a generic income effect (Islam and Hoddinott, 2009; Thaler, 1999; Jacoby, 2002; Beatty et al, 2014).…”

Cash Transfers and Gender Differentials in Child Schooling and Labor: Evidence from the Lesotho Child Grants Programme

“…Although the CGP is unconditional, program messaging did affect child schooling (Pace et al. ). Further, an impact evaluation study carried out by Oxford Policy Management () found that the CGP had a large effect on the proportion of children aged 6–19 who were attending school.…”

Show me the money

“…For example, changes in prices could affect household consumption as well as the outcomes of interest (Attanasio et al, 2013). Also, increasing household consumption by a cash transfer could change household's preferences and the additional income could be spent in a different way than current income (Pace et al, 2018). The simulations in this chapter therefore represent a very simplified version of reality.…”