Let Them Eat Cash By Christopher Blattman Summary

In the article ‘Let Them Eat Cash’, Christopher Blattman discusses about how cash programmes are met with scepticism from organisations and donors yet they have proven to have a positive impact on recipients in numerous studies and programmes. I agree with the writer that we should be more optimistic in that cash handouts can enable the poor in creating better lives for themselves. Essentially, cash transfers for the poor can be effective but more importantly, attaching conditions to cash transfers can encourage consumption of goods with positive externalities that can help them escape the poverty trap.
From an Economics point of view, cash is better than in-kind transfers (which were free meals in the article) because with cash, agents are able to achieve their highest utilities with a higher budget constraint curve. Given that everyone has a different set of preferences and hence consumption bundles, giving them free meals prevents them from attaining a higher indifference curve.
Conditional Cash Transfers (CCTs) “targeted to the poor and made conditional on certain behaviors of recipient households” (Fiszbein et al. 45) while Unconditional Cash Transfers (UCTs) range from “non-contributory pension schemes, disability benefits, child allowance, and income support” (Baird, McIntosh, and Özler 1710). CCTs target the poor’s underinvestment in human capital, in terms of education and health. There are positive externalities from education and health, however with limited income and low perceived returns, the poor could be consuming below the private optimal level or their private optimal level is below the social optimal level (Fiszbein et al. 9-10). With better education and health, the poor have opportunities in escaping poverty in the future. As such, CCT programmes can correct market failures through the conditions imposed on