How are countries around the world responding to inflation? Our new tracker v5 offers data on 1,333 social protection measures to counter global price shocks. The total level of investment is over a trillion dollars, or about 1.1% of countries’ GDP on average. While subsidies continue to be the most widely used response, their share out of total programs dwindled from 79% at the beginning of the inflation crisis to about one-third. In contrast, the share of social assistance doubled over time, ranging from 17% to 31% between version 1 and 5 of our tracker. Fee subsidies account for half of total subsidy measures, while over three quarter (77%) of social assistance is provided in the form of cash transfers. Social protection programs are planning to cover 1.94 billion people (25% of the global population); yet data on actual coverage portrays a more sobering picture: social assistance responses covered 173.8 million individuals, 145 million of whom are reached by cash transfers in 17 countries. While program duration is 7.3 months on average, almost one-fifth of responses were extended by 8.5 months.
One feature that makes cash transfers popular is their fungibility. But what happens if the use of money gets restricted? The empirical answer comes from Kenya: in the Kalobeyei settlement, about 8,000 refugees received $14/month via mobile-money transfers restricted to food items (and excluding alcohol and tobacco). After three years, or in 2019, the restriction was lifted for about a thousand households living in a geographically separated area. Quasi-experimental evidence from Siu et al shows that restrictions generated a huge shadow resale market: about 70% of households on restricted cash resold food, and 78% exchanged it for other goods. This was also mentally taxing, and lifting the restriction significantly increased subjective well-being (although by a moderate effect of 0.18 standard deviations).
But wait a second… if unrestricted cash transfers are that great, why does the distribution of food and other stuff persist at large-scale? Yours truly unbundles the “cash versus in-kind” debate through six fictional characters: the beneficiary, the economist, the political scientist, the nutritionist, the practitioner, and the median voter. Each of them brings a different and valuable perspective, so where do we go next? I discuss three scenarios and some cross cutting issues.
From debates on transfer modalities to those on targeting. A paper by Kidd et al argues that universal (aka non-poverty targeted) programs can be introduced and scaled-up progressively (e.g., see figure 3.1, p.7). Specifically, they simulate the gradual introduction of old age, disability and child benefits in Ghana, India, Uganda, and Vietnam. At its height, the annual combined cost of the schemes would be between 1.2-2% of GDP over the next 17 years (figure 3.4, p.13). Considering tax financing, around 70% of the population in those countries would be net receiver (p.18), with relative poverty dropping by 45-75%.
Speaking of financing, what are the poverty and distributional effects of tobacco taxation? A great toolkit by Chaloupka et al lays out methods and practical examples – see for example the case of Georgia using accounting approaches (p.22) and Extended Cost-Benefit Analysis (p.37). Health bonus: Molineus et al document that in Tbilisi, poorer households experience higher levels of pollution.
From financing to politics: a paper by McCarthy et al argues that the introduction of conditional cash transfers in Indonesia has generated a wealth of technical knowledge. Yet such “metricized” know-how depoliticized deep “political questions of distribution”. Put differently, villagers would prefer a broader approach reflecting established cultural expectations and moral claims (as opposed to highly targeted practices). However, such model entails resources that the state is unwilling or unable to provide (except in crises like the pandemic).
Speaking of politics, Chrisp and De Wispelaere assess the political prospects for basic income following different crisis events. In short, they found that “crises do not enable basic income to overcome critical political barriers” (email me for a copy).
More on crises: in the Sahel, WFP and UNICEF penned a “twin-track approach” to deliver shock-responsive social protection, that is, a framework to help “government-led” and “government-aligned” approaches coexist (p.10). BTW, Sierra Leone just launched its National Social Protection Strategy 2022-2026.
Let’s tackle another big humanitarian dilemma: after the Taliban’s edicts against employing women in Afghanistan, should international organizations refuse to comply or uphold the delivery of assistance? A new report by Bowden et al argues that some solutions and “workarounds and low-profile local negotiation strategies” are emerging.
Four humanitarian bonuses conclude this edition: according to WFP’s new cash policy, in 15 years the organization’s engagement in cash transfers and vouchers rose from $10 million to $3.3 billion (h/t Francesca de Ceglie); CaLP refreshed its e-learning course on “linking humanitarian cash and social protection” available in four languages (h/t Pauline Perez); CDAC reviews the state of communication, community engagement and accountability across the Ukraine response; and UNICEF is hosting a webinar on humanitarian localization in MENA (July 6, 10am Amman time).