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NonprofitI’m Paul Niehaus of GiveDirectly. We’re testing a basic income for the extreme poor in East Africa. AMA!

May 31st 2016 by paulniehaus • 23 Questions • 3677 Points

Hi Reddit- I’m Paul Niehaus, co-founder of GiveDirectly and Segovia and professor of development economics at UCSD (@PaulFNiehaus). I think there’s a real chance we’ll end extreme poverty during my lifetime, and I think direct payments to the extreme poor will play a big part in that.

I also think we should test new policy ideas using experiments. Giving everyone a “basic income” -- just enough money to live on -- is a controversial idea, which is why I’m excited GiveDirectly is planning an experimental test. Folks have given over $5M so far, and we’re matching the first $10M ourselves, with an overall goal of $30M. You can give a basic income (e.g. commit to $1 / day) if you want to join the project.

Announcement: http://www.slate.com/blogs/moneybox/2016/04/14/universal_basic_income_this_nonprofit_is_about_to_test_it_in_a_big_way.html

Project page: https://www.givedirectly.org/basic-income

Looking forward to today’s discussion, and after that to more at: /r/basicincome

Verification: https://twitter.com/Give_Directly/status/737672136907755520

THANKS EVERYONE - great set of questions, no topic I'm more excited about. encourage you to continue on /r/basicincome, and join me in funding if you agree this is an idea worth testing - https://www.givedirectly.org/give-basic-income

Q:

Is there any outcome or condition under which you would stop this ten-year experiment early?

A:

we monitor every recipient pretty closely -- 99%+ followup via call center to check for any issues like asked for a bribe, domestic dispute, etc., and can pause payments in those cases. we'd do the same here. then there are the macro risks (e.g. exchange rate shocks, post-election violence) which we're hedging financially and with the ability to send payment remotely without needing boots on the ground


Q:

Hi Paul - Jurgen here, I am involved in the Finnish experiment. First off, kudos for the planned experiment - awesome stuff. I'm very interested in what we can take from the experiments conducted in Kenya (Namibia, India) to learn about basic income in the context of Europe, Canada and US. The big issue here is that both the policy and political context are so different. What do you think are main lessons we can expect to learn from the GiveDirectly experiment that transcend the particulars of a developing world context?

A:

Jurgen thanks for joining - we're likewise excited to watch and learn from your project

agreed there are big differences and hopefully there will be dozens of high-quality tests globally in the next few years. if nothing else we want the East Africa experiment to motivate further testing.

beyond that though I do think the political opposition to UBI rests on some pretty strongly held beliefs about human nature - other people are irresponsible, we can judge better what's best for them - that this project will speak to, and at least force a closer examination.


Q:

Could you summarize, in as simple terms as possible, how your experiments are rigorous? How do we refrain from imposing our biased expectations on the experiments' conclusions?

A:

thanks Kyle, super question =)

I think there are a few key practices that matter a lot here. First, experimental - randomly assigned treatment and control groups. Second, pre-announced and pre-specified. Defined in advance what outcomes you'll measure, so you can't ex-post data mine. Third, involve credible external researchers whose careers depend on a reputation for objectivity. We're working w/ Abhijit Banerjee on this one for example.

There's a lot more and this is one of my favorite topics, but that's a snapshot


Q:

In the test will the UBI be given to every adult, one per household or every person in the household regardless of age. If there is an age cut off, what will it be?

A:

one per adult. different views out there on whether UBI should include transfers to parents on behalf of their kids; our sense is we already have a lot of evidence on impact of child support grants (eg Kenya, S Africa) so higher value use of resources to focus on estimating impacts of the adult BI


Q:

Will you open source your data?

A:

not "our" data technically as they will be collected by a 3rd party research outfit (eg IPA on several past projects), but yeah bottom line once the research gets published the data have to be available to others to replicate / stress test etc. standard practice at journals now.


Q:

What have been the biggest objections to both the concept and the organization?

A:

I think the big three are (1) people will waste / drink it, (2) ppl will stop working, and (3) gov't can'd afford it.

(1) and (2) we'll test and learn about, though so far the evidence on other forms of cash transfers has been the opposite -see below

(3) is true in some places (eg US) and not others. In intl development broadly, though, I think the big picture is looking pretty good - the total global poverty gap is around $65B / year, and ODA alone is double that. From a math perspective, extreme poverty is pretty eliminatable

work effort - http://economics.mit.edu/files/10849 temptation goods - http://documents.worldbank.org/curated/en/2014/05/19546774/cash-transfers-temptation-goods-review-global-evidence


Q:

) What is the minimum amount of cash that a household/individual can receive as Basic Income in the pilot study?

2) The pilot is planned for a period of 10 - 15 years....if in case, unfortunately someone enrolled in the study passed away in the study period, what happens to their money?

3) Where households fight over money coming in as Basic Income, like in a scenario where the wife feels she has been working so hard to win the bread for the family, where the husband has never been able to provide for the family, and so the wife feels she should control the family finances, but the husband feels that as (traditional) head of house he should be in charge, what kind of direction can GiveDirectly provide on this?

4) My village is poor and I know that people shouldn’t put it individual requests, but I feel this is a great opportunity to shed light on the poverty issues in my own home village of Namawanga in Western Kenya. People struggle and always have as far back as I remember. A lot of them with no dignity of life as a direct result of extreme poverty. A Basic Income would definitely greatly contribute to the overall improved quality of life, plus QALYs. Among biggest challenges at home for the poor village of about 3,000 hardworking people is lack a proper access to safe, clean, drinking water and income poverty. If you’re interested in a more detailed account of the poverty issues of my village please let me know so I can email it to a team member at GiveDirectly. It basically a summary of the priority needs and a crude situational analysis of the respective poverty issues.

A:

awesome to get a question from W Kenya. quick answers

1 - we're finalizing, looking at around $0.75 nominal = $1.50 PPP

2 - default is transfers stop, which is what most people have in mind when they describe a UBI. we're considering if there's a way to make temporary exceptions for parents of young kids.

3 - if anything data so far on cash transfer have shown reductions in domestic violence, but we'll keep measuring

4 - really appreciate and think it speaks to why we want to run this test. the village selection process is going to be based on systematic data and will be randomized, so can't make any commitments, but it sounds like Namawanga will have as good a shot as any


Q:

A lot of extreme poverty exists in remote areas. Wouldn't localized inflation be a big problem? Could the price of basic goods go up and "cancel out" huge portions of cash transfers?

A:

we haven't seen evidence of this, but it's one of the questions we're looking in another ongoing study of local market impacts - pre-registration stuff below. my personal best guess prediction is we'll see some temporary price spikes which are what motivate traders to bring in the stuff people now want more of, like in any market.

https://www.givedirectly.org/research-at-give-directly https://www.givedirectly.org/pdf/General%20Equilibrium%20Effects%20of%20Cash%20Transfers%20Pre-Reg.pdf


Q:

I have worked extensively in East Africa including at central-level (with governments) they are institutionally very weak particularly in terms of data harvesting and processing. How does GiveDirectly, if at all, propose the integration of BI at a national level without sacrificing your current levels of efficiency in terms of outputs/outcomes?

A:

yeah, lots of work to be done here. that's why Michael and I started Segovia (http://www.thesegovia.com/about) - we think the most scalable way we can help other implementing partners and gov'ts.


Q:

Givewell suggests that donations to public health charities such as the Against Malaria Foundation - who distribute insecticide treated bed nets - and the Deworm the World Initiative or Schistosomiasis Control Initiative are ~5-10x more effective than donations GiveDirectly. Do you agree think that it is plausible that donations to public health charities do more good than donations to cash transfer charities? If so, are there additional, non-impact reasons for donating to GiveDirectly instead?

A:

I think we're different. our goals go well beyond the direct impact of the cash; we're aiming to reform the aid industry and get people to routinely explain why they think they can do better than cash transfers. a lot of money gets spent every year on stuff with no evidence at all, or evidence it doesn't work. so we're really happy that GiveWell now does this, and we'd expect that in any given year they ought to be able to find a few opportunities that "beat cash."

the basic income project is a good example of a situation where we think we can both delivery highly cost-effective direct aid to individuals and also in doing so inform and reshape a much larger and important policy debate


Q:

I've been giving to your organization since it was featured on planet money quite a few years back. Do you guys plan on performing more experiments with direct payments, like differing amounts or different payment periods?

A:

thanks for joining us, I really appreciate that. it's been quite a journey.

yes, we plan to keep the experimentation going - last year I think every dollar we delivered was part of at least one experiment, and currently we're doing a whole range - the UBI, one on macro impacts of cash influxes, one with behavioral economists on some of the transfer structure questions you posed, one with USAID on benchmarking their spend... there's an enormous amount to be learned. the hard part is prioritizing =)


Q:

Discussions surrounding basic income in Western contexts are usually framed and critiqued around the notion of deserving and undeserving recipients. How do we get past this notion and have meaningful discussions about the role and implementation of universal basic income?

A:

in many ways I think this is the same discussion we've been having with folks ever since starting GD- how should we think about the poor, what do the data say. I think it takes time for perceptions to change, but I always find people react really positively to the data (below).

work effort: http://economics.mit.edu/files/10849

temptation goods: http://documents.worldbank.org/curated/en/2014/05/19546774/cash-transfers-temptation-goods-review-global-evidence


Q:

Based on your activities already, and discussions you have undoubtedly had with policy actors at various levels, are you getting any sense that institutional adoption either by countries themselves, or on a regional/international level is plausible, or is a Basic Income Guarantee limited in a development context in your opinion at the level of charitable giving?

A:

there's a spectrum, from places voting on it (Switzerland) to places actively debating it (Namibia) to places considering smaller steps in that direction (e.g. India, debating whether to replace food transfers with cash transfers). charitable $ isn't going to fund a UBI at national scales but the opportunity for us a donors is to take the risk here and test something that wouldn't be easy for policy-makers to do


Q:

Hi Paul, thank you for doing this. GiveDirectly is one of the charities I always use as an example to people when they ask about the dangers of charitable giving, so could I like share my experience and ask a question?

In 2015 I was doing charity work in rural Kenya, specifically Siaya county, Sigombre ward, in the village of Got Osimbo. It was during this time I learned how messy and complicated charity is. I had read a book called Toxic Charity, by Lupton, whose main premise is that most charitable actions end up harming the receivers in the long run. He goes through countless examples of harm, from loss of dignity, to reduced work ethic, to an attitude of dependency and entitlement toward the goods of others. I would also like to point to a documentary called Poverty Inc. that delivers a very similar message to that of Toxic Charity, but is set in Haiti.

In Kenya I met people with workable, fertile land who refused to farm because it was easier to parade their kids in front of charities and ask for food/clothing. Local farmers/cloth merchants hated whenever a charity came through because they could not compete with the flood of free food/clothing that came along into the market. There were some people who would befriend charities and act as if they were solely responsible for the presence of the charity. As soon as the charity left, those who wanted the charity back would have to give something to these people. I could give countless other examples, but I'll move onto how I believe GiveDirectly engages in this type of toxic charity. I worked in Sigombe for a few months, and got to know some of the locals quite well. I was helping them with farming activities, which involved helping them come up with a business plan. I was extremely shocked to realize how few records some (not all) of the people I was working with kept. I would ask how much money/time they spent on xyz capital/activity, and there wouldn't be an answer.

I remember bringing up toxic charity with one of farmers I was working with, when he mentioned your charity. He explained to me how men who got the money would spend it on alcohol, and that one person died of drunk driving. Women, sick of the country life, would take the money and their children, and leave their husband to try to start a new life in the city. More often than not, they wouldn't be able to make it for long in the city and they would either turn to prostitution or come back to the village and get abused by their husband.

While I did not directly witness the second harm, I definitely saw the first. The spending of charity money on harmful things by financially illiterate people was rampant.

What I am curious about is how aware you are of these things. If there are any statistics you could provide on the long-term quality of life for individuals who received resources from your charity, I would be greatly appreciative. If it does seem like people are being helped in the long run, then I apologize and will immediately start rooting for you guys.

A:

thanks for the thoughtful note. I hear a lot of these stories talking to people about aid programs of all stripes and sorts across Africa and Asia, and I do think there poorly designed programs out there that can end up doing a lot of harm. that said, researchers evaluating GD haven't found this, and systematic reviews of evidence on the impacts of cash transfers haven't found it- some links to get started

https://www.givedirectly.org/research-at-give-directly https://openknowledge.worldbank.org/handle/10986/18802


Q:

Is this test being conducted in coordination with leaders or groups from the area?

A:

the funding and operational decisions will come from us, but as with any of our projects we’ll work with local leaders to get their buy-in and also learn how we can craft the study to inform policy questions they have. (for example, in Kenya a big question is optimal size of social protection payments.)


Q:

Hi Paul! Moderator of /r/basicincome here. Thank you for doing this AMA and thank you as well for investing such a great amount of resources (especially with your upcoming UBI experiment!) in the idea of simply trusting people with cash.

Just today Eduardo Porter over at the New York Times, posted what he considers a takedown of the idea of universal basic income, and titled it Why a Universal Basic Income Will Not Solve Poverty. He is not the first to make such claims and will certainly not be the last, but what I find most telling is his and others' complete lack of evidence to support his/their view.

What I mean of course by lack of evidence is that he points to not a single cash transfer study. He doesn't say, a randomized controlled trial was done in "Location" where cash was given to the poor without strings and poverty actually went up. He doesn't say this of course because there is no such evidence. Where cash is given, cash reduces poverty.

With that said, my question to you is do you even know of any evidence where a RCT somewhere showed that cash grants did not reduce poverty? Is there a single example you can think of where increasing the incomes of the poor led to poor outcomes?

Eduardo Porter also makes the claim that giving cash somehow destroys the work incentive and yet again, your own data disproves this. People given cash in Uganda and Kenya actually work more because they're enabled to do so, especially via entrepreneurial ventures.

And that leads me to my second question. I've read some incredible examples of how people started their own businesses using GD's cash grants. What's your own personal favorite example of the creative use of cash to start a business that perhaps you would have never thought of?

A:

thanks- yeah, we've all been enjoying Eduardo's very timely piece this morning =)

hilariously, NYT just recently ran the story on systematic review of experimental evidence that cash transfers in emerging markets haven't reduced work effort - http://www.nytimes.com/2015/10/21/business/the-myth-of-welfares-corrupting-influence-on-the-poor.html

to your question- there are surely individual examples of bad outcomes (eg there is definitely someone somewhere who got transfer and got drunk), but we haven't seen any evidence of cases where this was systematically true. and I think it's that distinction between anecdotes and averages that we have to absorb.

to your second question - my favorite is the guy who started a band and recorded the GD theme song

https://soundcloud.com/givedirectly/givedirectly-theme-song


Q:

Paul, what will your team do to avoid creating dependency? For example, are your beneficiaries being trained in financial literacy, savings, and how to invest those dollars in increasing their household livelihoods? What will those families do when your funds go away?

Creating a culture of dependency could do significant harm, unless at the same time you are helping the community become more self-sufficient, resilient, and sustainable.

A:

we're not going to be doing those things. the evidence on training interventions is pretty bad, sadly, and the evidence on cash so far is that it doesn't create dependency. but maybe it will this time, and that's why testing is important.

http://economics.mit.edu/files/10849


Q:

Hi Paul, will crypto currencies like Bitcoin help you and your work?

A:

I think they can help a bit.

to give you a sense, of our ~9% cost of of delivering a dollar to a Kenyan recipient, around 3% is money transfer fees. of that, around 1.5% is FX spread and 1.5% is in-country mobile money tariff. cryptocurriences don't help much with the latter which reflects the real value of building and running agent networks in remote areas, but they could help on FX if the market becomes less centralized and spreads drop. FX markets are still pretty opaque, slow.


Q:

How do you deal with the cultural pressures around money? In this part of the world, it is assumed anyone with money should pay for their extended family completely. It is why people in my community rush to purchase things they don't necessarily need--so they don't have to give the money away. How do you deal with this (and other) cultural factors?

A:

recipients think / talk to us about this a bit, and interestingly one thing they say they value about mobile money is the privacy of getting acknowledgment on their own device and cashing out whenever they want. one thing we do to facilitate this is push to avoid centralized "cash-out" days as much as possible, to max privacy. this is on my list of things I think it may be worth testing experimentally - how does publicity of receipt affect use and impact.


Q:

I've heard a lot about your (very robust) UCT trials. My question: Has anyone has looked directly at the effect of remittance payments of immigrants working in wealthy countries? There would seem to be a lot of parallels and a large sample to draw from.

A:

there's less on remittances than you'd hope, but some high quality evidence. I'd start with Dean Yang's review and then work forward to more recent stuff (esp p 138)

http://sites.lsa.umich.edu/deanyang/wp-content/uploads/sites/205/2014/12/yang_2011_jep.25.3.pdf


Q:

Has anyone considered using the total donated funds to set up an investment portfolio and use the income generated to fund people's "basic income"? Why dry up the well?

A:

we did. there's a lot to like about this approach, but you need to raise more in total for a given sample size if you don't give down the capital, so at the end of the day it's just a question of how long you want to pay to run the thing for


Q:

Hi there, thanks so much for doing this AMA! I have considered giving to your charity however a friend who works in academia has raised concerns over;

  1. That official university connected experiments need to first pass an ethics comity, whereas this would not be the case here

  2. The lack of an independent auditing body for the project execution/results

Are you able to confirm/deny or provide further information on these aspects?

Thanks so much!

A:

measurement and eval here is being done by university-affiliated researchers (including Abhijit Banerjee, MIT) and has to pass all the usual IRB scrutiny


Q:

do you anticipate any way that dishonest people could exploit this idea? I ask because in every advancement of our society, there are people who will attempt to manipulate it for their own benefit.

A:

yeah. before GD I worked mainly on anti-corruption with gov't of India. all programs have to manage this stuff, there are always people who try.. the question is how to modernize delivery systems to reduce this, and I think GD and also Segovia are playing an important role in this. digital transfers and mobile phones help enormously relative to the old world of putting bags of rice on a truck and hoping they get into the right hands.