Category Archive: Interviews

1. Feminist Theory, Gender Inequity, and Basic Income

   May 16, 2019 12:00 am Comments Off on Feminist Theory, Gender Inequity, and Basic Income

   Almaz Zelleke is Associate Professor of Practice in Political Science at NYU Shanghai and the Co-Area Leader for its interdisciplinary Social Science Major. Her essays “Feminist Political Theory and the Argument for an Unconditional Basic Income” and “Institutionalizing the Universal Caregiver through an Unconditional Basic Income?” are essential works in the feminist literature on basic income—exploring the policy’s potential for fostering gender equality. She currently serves on the International Advisory Board of the Basic Income Earth Network and on the Board of Advisors of the US Basic Income Guarantee Network.

   In this interview, we discuss historical feminist and women’s movements that demanded a basic income and evaluate how these movements’ demands complicate contemporary justifications for universal basic income. Specifically, we discuss the welfare rights movement that emerged in the United States in the 1960s. That movement—led by women of color and welfare recipients—emphasized persistent failures in the American welfare state that left women and children particularly vulnerable to poverty. Their activism included calls for a Guaranteed Annual Income, which emerged out of a broader feminist critique of welfare regimes built around the male breadwinner model. For the activists in this movement, an unconditional economic floor was a necessary condition for establishing gender equity.

   Today, commentators and policymakers sideline this history and its theoretical and political offerings in discussions of welfare reform. Zelleke reconciles these feminist concerns with contemporary debate around basic income and brings feminist criticism to bear on welfare policy. Our discussion explores political change and the processes that lead to policy creation, touching on the presence of basic income into the 2020 election cycle. We consider the challenge of focussing the political will surrounding basic income, and conclude with policy recommendations that could move the US towards an unconditional UBI.

   Current discourse on basic income

   Hana Beach: Your work on gender and basic income provokes much-needed questions about the direction of the policy debate—particularly by reintroducing women-led movements from the mid-twentieth century into the history of basic income. I wonder why, in your view, there’s been a resurgence of basic income debate in recent years? How has it achieved status as a mainstream policy proposal?

   Almaz Zelleke: I think the answer is that basic income is a solution to the problem of persistent poverty and increasing inequality. As other ways of addressing poverty and inequality have been tried and have not succeeded, it’s among the only policies that’s remained on the table—and is increasingly the one that makes the most sense.

   Why has it particularly come back at this moment? It’s true that over the last five to ten years interest in basic income has increased—first in Europe and then in parts of Africa and Asia—and there have been basic income pilots in certain areas that have gotten some attention worldwide. In particular, I think that the 2016 referendum in Switzerland brought particular attention to basic income in the United States. Unfortunately, it didn’t pass, but the basic income they were discussing was a very generous one—about $2,500 a month per person.

   HB: There’s been so much talk about automation. What does this emphasis say about the possible role of a basic income in society?

   AZ: When Switzerland started talking about an unconditional basic income, it caught the attention of people in Silicon Valley, particularly men in tech, and men in the larger American business media. These men have noticed that we are moving in the direction of increasing automation and that this automation is going to come for blue-collar jobs and some white-collar jobs, so there’s a desire to address that potential job loss. My own view is that automation will probably change the kinds of jobs that are out there rather than eliminate them. I do think that men pay more attention when the jobs that are going to be lost are typically male jobs. They aren’t necessarily concerned about the jobs currently performed by women or the work that women do that hasn’t been paid in the first place.

   HB: Right—mainstream discussions about UBI tend to focus squarely on the labor market, but that risks overlooking both the feminization of poverty and gender discrimination in the current welfare system. The arguments and justifications for a policy tend to inform its shape in practice—if the arguments surrounding UBI ignore persistent problems like gender discrimination in welfare, then the policy might fail to address that.

   AZ: Yes, that’s an insightful point. Basic income is kind of a big tent: It’s a mechanism that people on the right and the left can use to resolve different problems. It’s really a kind of flexible tool. But, you have to decide the problem that you are trying to solve with a basic income and that decision will determine the structure of the basic income.

   We see Andrew Yang, for example, who comes out of the tech industry, proposing a basic income for working-age adults and not for children. The problem that he is trying to solve is a working-age adults problem. I’m more interested in the kind of basic income that eliminates poverty in the richest country in the world—one that has the potential to meaningfully reduce inequality. If your goal is to eliminate poverty in the United States, the UBI has to go to children as well as adults, because our most economically vulnerable children live in single parent families. If you want to address gender inequality, it has to go to individuals rather than households, and if you want it to address inequality as well as poverty you have to finance it in a way that is redistributive.

   HB: Can you speak a bit more about how women get left out of the current discussion around universal basic income?

   AZ: When discussion about UBI centers around the future of work, we don’t pay attention to the type or quality of jobs that women currently have in this economy. Service jobs and personal service jobs are paid at a lower rate than semi-skilled, higher-skilled, or low-skilled jobs that are typically held by men. One of my favorite comparisons is that of a sanitation worker and a child care worker. A sanitation worker is typically a job held by a man, one that is unskilled, typically unionized, and one that pays pretty well. Now, a job taking care of children in a childcare center is equally unskilled. It is arguably a stressful job, a dirty job in some ways, but it’s a very low paying job—often close to the minimum wage. What accounts for that disparity? One’s a woman’s job, one’s a man’s job, but they have the same kind of education or training requirements. In fact, childcare centers are now requiring more training on the part of childcare workers, but the pay isn’t going up proportionally. Why is that? I think it’s because those jobs are typically held by women and we don’t value care in our society. We don’t pay a lot for it, because we know that most care is provided for no money at all.

   How historical movements for basic income inform the current policy debate

   HB: Your work touches on women’s liberation movements—in the UK, the US, and Italy. You’re a political theorist, not a historian, so I’m interested in hearing more about how and why you see these movements as being important for understanding the basic income debate.

   AZ: My original research into basic income centered on the Rawlsian liberal egalitarian tradition. I found that most thinkers in this tradition thought that an unconditional benefit was not justified. They believed in the principle of reciprocity: that anyone who received benefits financed through a tax on working people should reciprocate those benefits by demonstrating a willingness to work. This theory underscores our current welfare state, which is based on conditional benefits for poor people, with general consensus that we can ethically tax people to pay benefits to people who unable to work in our capitalist system.

   I really wanted to figure out if an unconditional basic income could be justified. This led me to a lot of feminist literature¹ that pointed out that when Rawls and others like him thought about rights and obligations in a society, they typically imagined an independent adult—somebody who is neither a dependent nor has a responsibility to care for dependents. In other words, an adult man. Feminist critics of traditional liberal egalitarian theory began to argue that outside of the realm of work and the realm of leisure, there is a realm of care—all the work that goes into raising an independent adult; the work that others, typically female adults, do in their prime working-age years in the care of children, the family, or elders. In order to build a just society, we have to consider this realm of care. We have to think about how care is provided, who is providing it, and how it is compensated. I realized that the only way to justify an unconditional basic income is by taking care into account.

   In the feminist literature there is a divide between those who think that a basic income is a good thing for women and those who think it will reinforce women’s disproportionate responsibility for care. They are worried that people will say that women should stay in the domestic sphere because now they are being compensated for doing so.

   What’s interesting to me about the welfare rights movements that originated in the 1960s and ’70s in the US and in Europe is how they inform this feminist debate. In those movements, the women who would have been the immediate beneficiaries of an unconditional guaranteed income were absolutely in favor of it. It was middle class and professional women in the 1970s who were against the idea of a basic income and who thought it would be something that would relegate women to the domestic sphere. This argument clearly doesn’t offer an intersectional understanding of feminism. When we think about what’s good for women, we have to think about what’s good for women of different classes and what’s good for women of different races and ethnicities. The outsourcing of childcare is one of the things that makes it possible for middle class and professional women to have careers. When women join the labor market, it’s not the case that care work is redistributed evenly among men and women. It’s being redistributed among women—specifically to poor women of color, to legal and undocumented immigrants, who now have to leave their own families in the care of someone else, who is typically unpaid, and earn a wage by caring for other people’s families. Redistributing care work in this way does not solve gender division of labor. We have to redistribute it to men as well.

   HB: In her famous essay “Welfare is a Women’s Issue,” former chairperson of the National Welfare Rights Organization [NWRO] Johnnie Tillmon made that connection about domestic service work and the division of labor—her analysis, gained from lived experience, was spot on, which I think says a lot about the importance of participatory policy design.

   AZ: It’s absolutely important to hear from the people who are going to be the biggest beneficiaries of a basic income or any other kind of policy of welfare reform. I’m drawn to the welfare rights movement because women were arguing for increased and unconditional welfare benefits. Those demands are clearly important to the discourse around basic income today.

   The ideology of work and of making it on your own is strong in the United States. Some people who may be beneficiaries of a basic income don’t want a benefit without working for it. They don’t want a hand out, they want a hand up. They want to get a job and pay their expenses; they don’t necessarily want money for nothing. I respect that attitude. It really disproves this misconception that basic income will pay people not to work. You hear the fear today that a basic income would be a payoff to those we’re basically writing off as unemployable. In reality, it provides the foundation so people can work. It provides the money that can pay for childcare, transportation, education and training. It can actually help people participate in waged employment.

   HB: The intellectual history that gets told of UBI often begins with Friedman and Hayek, and then jumps to today—completely leaving out these women-led struggles that included calls for a guaranteed income. Why are feminist arguments for the policy left out of the dialogue?

   AZ: The proposal of a basic income, called different things, goes back several hundred years. In the United States, the policy goes back many decades. In the 1960s and 1970s basic income was referred to as Guaranteed Minimum Income or Guaranteed Annual Income. We do have to be careful because some people who use those terms were not using them to refer to unconditional benefits—in a lot of those cases work conditions were attached. But if you look at the history of the welfare system, there has been ongoing discussion about how women would fare under different provisions in those proposals. This isn’t the first time we’ve been discussing these questions.

   HB: Why do you think there is a persistent difficulty in getting the differential impacts of welfare regimes along gender lines understood in the mainstream policy discussion?

   AZ: One reason this discussion has to be rehashed in America, especially in regard to basic income, is that the NWRO is often blamed for the defeat of Nixon’s Family Assistance Plan [FAP]. In 1969, President Nixon proposed FAP—a guaranteed income that was below the poverty level and meant to be conditional on work. It was an unusual proposal to come from a Republican president, but in the 1960s there was a lot of conversation about poverty and about why we have poverty in the United States. This moment coincided with new social science research that said that if policymakers wanted to address poverty, the best way to do it was to give cash assistance to people in need. Nixon’s plan faced a lot of criticism from the right, who wanted the poor to be subject to the discipline of the labor market. But it also faced a lot of criticism from the left which didn’t think the policy was large enough, including the NWRO which initially did not want to be part of the development of FAP. However, once they realized it was cash assistance similar to their proposed Guaranteed Annual Income, they became supportive of it even though they thought it was too low.

   It’s important to remember that welfare is administered state by state, so there is tremendous variety in the amount of payments. This makes it hard to build a national movement. For example, the amount Nixon was proposing was lower than the welfare payment in states like Illinois and New York, but much higher than the welfare payment in the South. Since the NWRO was led by women from the North and California, FAP would have reduced their payments. In much of what I read of that period, these women get blamed for the defeat of FAP. I don’t think that’s fair. If there was a villain in the story it would be Senator Russell Long, who proposed the Earned Income Tax Credit, but that’s another story.

   This blame along with the middle-class and professional women’s movement of the 1970s overshadowed the history of the NWRO. That movement was focused entirely on access to the workplace and not on benefits for women who weren’t working.

   HB: The gender pay gap has become somewhat prominent in national discourse. Does that discourse make the same errors as some of the professionalized elements of women’s movements from the past?

   AZ: There is still a lot of rhetoric of choice and personal responsibility around the differences of women’s pay and women’s professional success. Lean In is a good example of that. It was heavily criticized for emphasizing individual women’s responsibility, and ignoring the structural barriers women face in participating in the workplace. It’s true: women in general make a lot of choices about work, particularly around childbearing years. But to see that as a choice alone misses so much about what is important about reproduction of our society. It’s not just personal reproduction, it’s the reproduction of our workforce and society. In this country, we put too much of that responsibility on individual women and individual families. We don’t think about it structurally.

   HB: In addition to the important gender dimension of their critique of welfare programs, an interesting aspect of the NWRO support for guaranteed income is that it was very much a grassroots organization, made up of the working and unemployed poor. This is distinct from the notion that UBI is a purely technocratic policy meant to diminish the political will of workers. A UBI could of course be designed to diminish political will or soften the transition to a more precarious work landscape, but this movement is evidence of basic income being incorporated into a grassroots, multidimensional movement.

   AZ: We often forget the social movements that lead to policies. We think that these policies just came from the top. For example, we tend to associate Social Security with FDR. While he enacted the law, he did so in the context of a national movement called the Townsend Movement, which argued for a more generous pension, and other “share the wealth” schemes at the time. Social Security is actually a much less generous version of the Townsend Movement’s Proposal.

   Similarly, the EITC emerged in the wake of the welfare rights movement and was enacted against the backdrop of a lot of agitating about welfare and civil rights.

   HB: Have grassroots movements had an impact on current discourse about basic income?

   AZ: Occupy was the movement that brought the “one percent” into our lexicon. It got people talking about the distribution of wealth in our society. For example, there’s this sound bite that gets repeated that, since 2008, every year the top 1% of Americans get richer and the lowest 50% of Americans get poorer. We’re talking about these figures this way because of Occupy and I think that’s informed the basic income debate.

   Now, I don’t think there will be a women’s movement for basic income. The issue with women’s movements in general is that women are dispersed throughout society. So much about the condition of a particular woman depends on the class they are born into. I don’t think we can really mobilize women until we have an individualized system of taxation. Our household reporting of income obscures the distribution of wealth that takes place within families and couples. I think a separation between men and women in taxation could mobilize women in the way that other individually based concerns like the wage gap have. The problem, of course, is that the wage gap is only one part of the economic reality of women. It only affects women who are actually earning wages.

   HB: Where do you think contemporary will and discourse around basic income is going to go? There’s a growing number of pilot programs and demonstrations, do you think these will shape anything on the national or state level?

   AZ: On the question of pilots: we need to be careful about calling them UBI or basic income pilots. They aren’t universal. I would call these schemes cash transfer pilots and cash transfer demonstrations. They are targeted to poor people and don’t improve our understanding of the broader transformative societal effects that a basic income may have.

   I think these pilots are neutral at best and dangerous at worst. They’re neutral because the question of whether we should have a basic income is not something we can settle through a demonstration or pilot. It’s really about if we believe our economy should be as democratic as our politics. In our political sphere, everybody has one vote. That doesn’t mean we have equal political power, but we each have a basic political stake in this country if we are citizens. So the question is do we want something analogous in the economy. All the economic power there is is determined through the market, inheritance, or other unequal systems. There’s no way to pilot whether or not we should have a more democratic economy. That’s something we have to decide is important and enact.

   There’s also a danger that these pilots will dissipate the interest and mobilization behind a basic income. I’m worried that we may study it for some number of years and that by the time the study is done, we’ve moved on to something else. I think we should try to build support for incremental steps toward a basic income now, and I don’t think we need the pilots or demonstrations to do that.

   HB: What are those incremental steps?

   AZ: This morning, I got an email about the National Academy of Science report on reducing child poverty in the United States. The commission looked into various ways of addressing child poverty in the US and one of the options is a child allowance—money that all parents would get depending on the number of children they have. I think that it’s likely that we’ll start with this kind of policy, a basic income for children. This isn’t a pilot, but it’s a nice way to start down a road toward a basic income.

   It’s also important to think about other foundations we might need for a basic income. One thing is going to be an individualized system of taxation as opposed to a household or couple system. Also, how do we start getting people to report their wealth? You can’t have a wealth tax until we quantify how much wealth is out there.

   We also need to start calculating and reporting on alternate measures on productivity in the United States. When I go home and make dinner every night, I hear what the Dow Jones has done. Unemployment figures are reported once a month; poverty figures are reported once a year. How do we start changing the balance in our economic reporting to start reporting on measures that actually affect how individuals are doing on a daily, weekly, or monthly basis? We need this basis to crowd out all the news about how people on the top are doing.

   I’ve also been thinking about how to build a sense of solidarity between Americans, which I think is something we need to do to help us consider what we owe each other.

   HB: Is there anything from the welfare rights movement that you believe can contribute to the current debate on basic income?

   AZ: One of the things that we can learn from social movements in general is that we have to have a strategy. There may be an end goal that we want, but we need to consider what we would be willing to settle for on the road to full basic income, and what we would be wary of settling for. In Nixon’s FAP, the benefits were divided between adults and children. The benefits for the adults could have been lost if the adult was unwilling to work, but the benefits for the children would have stayed. Buried in that rejected proposal was a guaranteed income for children, which would have really helped a lot of women on welfare. I think that’s a good strategy for basic income advocates today: to aim for a universal basic income, but be willing to settle for an unconditional child allowance. Let’s get our foot in the door and get a universal and unconditional benefit, even if it’s for part of the population. Let’s be willing to start with a smaller basic income. Again, I have no problem aiming for a basic income that’s $1,000 a month, but let’s understand that a basic income of $500 a month would make a tremendous difference to people who are living in poverty. Let’s be willing to adjust in terms of scope and amount, but not unconditionality.

   There’s a lot of discussion about expanding the EITC, which is conditional on work. I think that’s the wrong way to go. It’s true that the EITC has lifted people out of poverty, but when you think about it, the EITC is a wage supplement. Employers know that, so they can pay workers less knowing that they’ll get this wage supplement, which has a small effect on depressing wages in fields where EITC recipients are likely to be working. There’s a study by Jesse Rothstein that shows this. I would say we don’t want to go in the direction of wage supplement. We want to go in the direction of unconditionality.

   HB: Any last insights into how women can mobilize behind basic income?

   AZ: Teaching women that we aren’t living in scarcity is important. Convincing women to fight for access to the workplace and for support for the reproductive work that we do is important, as is illustrating that basic income is a net gain for women. If a basic income is financed through a progressive tax, either on income or on wealth, it would be a net redistribution from men to women. Why do men control so much of the wealth of the society? Do men really do the most work in our society? No, they get these outrageous income and wealth benefits that need to be redistributed between men and women. I think a growing understanding of the universal gains for women as a demographic from unconditional programs like basic income can help to build broad based movements for women.

   Reading List

   As an accompaniment to the interview, a short syllabus of readings from the feminist literature on basic income:

   • Camila Vollenweider’s 2013 paper “Domestic Service and Gender Equality” provides analysis on how domestic service complicates and sits within the larger feminist debate on basic income. Vollenweider places domestic service as a counter to feminists who caution that basic income may further entrench women in the domestic sphere. The article offers a nuanced, intersectional argument in favor of unconditional basic income.
   • Barbara Bermann’s 2008 paper “Basic Income Grants or the Welfare State?” compares Swedish style welfare states with cash transfers to examine their respective effects on gender equity. While Bergmann argues that a basic income may have retrograde effects for women in the labor market, she lays out an alternative model for a feminist welfare state that will ensure gender equity.
   • Toru Yamamori’s 2010 article “Missing Women: The Forgotten Struggles of Single Mothers for Basic Income” charts the sidelined history of women’s movements and their demands for basic income. Yamamori uses interviews with members of the movement to record and analyze the shape of feminist demands for UBI, exploring the complications that race and class introduce into the debate.
   • Ingrid Robeyns’ 1998 “An emancipation fee or hush money?” explores the feminist arguments against UBI, focussing on the potential negative effects for women in the labor market. She explores the necessary conditions for a UBI to benefit women and concludes that it must be implemented alongside other policies that target the gender division of labor.
   • Anca Gheaus’s 2008 paper “Basic Income, Gender Justice and the Costs of Gender-Symmetrical Lifestyles” argues for a novel metric of assessing the impact of a social policy on gender justice: “a society is gender‐just when the costs of engaging in a lifestyle characterized by gender‐symmetry (in both the domestic and public spheres) are, for both men and women, smaller or equal to the costs of engaging in a gender‐asymmetrical lifestyle.” With this goal in mind, Gheaus argues, basic income is insufficient for advancing gender-justice.
   • Almaz Zelleke’s 2011 “Feminist political theory and the argument for an unconditional basic income” similarly approaches the basic income question from the perspective of defining gender justice, but argues that a feminist account of justice requires an unconditional basic income.

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   1. 1. Susan Moller Okin, Justice, Gender, and the Family (1989) is the most important work here. See also: Carole Pateman, The Disorder of Women: Democracy, Feminism and Political Theory ( 1989); Joan C. Tronto, Moral Boundaries: A Political Argument for an Ethic of Care (1993); Eva Feder Kittay, Love’s Labor: Essays on Women, Equality, and Dependency (1999); and Nancy Fraser, “After the Family Wage: A Postindustrial Thought Experiment” (1997).

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2. How Do States Pay for Wars?

   May 3, 2019 12:00 am Comments Off on How Do States Pay for Wars?

   An interview with Rosella Cappella Zielinski on war finance

   War-making is one of the costliest endeavors a state can engage in: states must not only pay for troop wages, but also procure costly military hardware, support allies, and surmount immediate logistical dilemmas inherent in conflict. Peace following war brings its costs too: for example, by the end of the French and Indian War (1754 – 1763), the steep revenue requirements the British faced in protecting new territories would contribute to the instability that fomented the American Revolution.

   Academic study of war in the social sciences is as old as historiography itself, and political economists have considered the economic logic of war and peace for centuries. Yet social scientists have left several questions on financing conflict unaddressed: Why do politicians prefer to finance wars in one way versus another? What are the implications of various financing strategies? What institutions grow and flourish out of the necessity to raise the “infinite sinews” of war? The study of war finance in specific can help us answer these questions.

   In her 2017 book How States Pay for Wars, Professor Rosella Cappella Zielinski maps out a theory of war finance. As a sub-discipline, war finance has long existed on the periphery of academic debates in International Relations. Cappella Zielinski’s book is a novel contribution to a growing field, providing the first systematic review and analysis of how states are able to float the cost war. Her overarching theory of war finance is expansive, flexible, and useful for understanding the far-reaching implications of wars past and present. Cappella Zielinski’s research sheds light on the “tools of the trade” for raising money, the balancing act between domestic political concerns and politicians’ war finance decisions, and the unexpected consequences war finance has on income inequality.

   Below we discuss what first sparked her interest in war finance, the history of the sub-discipline, and the puzzles that remain to be solved.

   Kapu Rao: Can you start by saying a bit about what war finance is?

   Rosella Capella Zielinski: In my research, I explore how states procure resources and mobilize those resources for their national security needs. More broadly, as a discipline, people who study war finance explore how states pay for war. To give you an example, a recent report by the Cost of War Project at Brown places the cost of the 9/11 wars—17 years and counting—at $5.9 trillion. When we see that number, and look at the details, we can ask a question: Why have three administrations—from two different parties—all paid for the war in the same way? What are the implications of that?

   My work provides a framework for understanding these kinds of questions. States can pay for wars in a variety of ways: taxation, debt, printing money, plunder—but typically, in the United States, we think of just two ways to pay for war: taxation and debt. I believe that this dichotomy greatly simplifies all the varying types of taxation and debt, and that the differences between those types actually have huge implications for the distribution of wealth in a state’s economy.

   KR: In your book, you present the different war financing strategies along a “citizen’s awareness” continuum. Direct taxation and forced labor are placed on one end of the spectrum, with citizens being highly aware of those strategies; while foreign debt rests on the other end, often barely comprehended by the average citizen. Why did you decide to use citizen awareness as the axis along which you place the various financing strategies rather than, say, cheaper versus costlier forms of financing?

   RCZ: The basic insight driving this is that leaders care about being reelected. (There are other scholars who write more directly about this, like Sarah Kreps, in her book Taxing Wars.) What’s important about this is that, because leaders care about being reelected, they are responsive to public opinion. Of course, there are different types of regimes and different types of leaders, but, for the most part, leaders care about public opinion and they anticipate how the public might react in different ways to different forms of financing conflict. Most people don’t like to be taxed, so leaders attempt to finance wars accordingly. If they think the war is going to get a lot of negative attention, they’re going to finance wars in ways that mitigate citizen awareness. This means they’ll borrow, or finance in other ways to make sure that citizens won’t feel that direct sacrifice, that direct relationship to the war.

   This concept is pretty old: Adam Smith and other classical economists forward this idea that once citizens feel the sacrifice of war, they’re not going to want it. Smith put it like this: Governments “are unwilling [to increase their revenue], for fear of offending the people, who by so great and so sudden an increase of taxes, would soon be disgusted with the war.”

   In modern times, leaders internalize this as a fear of getting kicked out of office if public opinion swings too hard the other way.

   KR: Can you talk about what drew you to war finance?

   RCZ: The less nerdy answer is that I was interested in political economy, had attended the Saltzman Institute for War and Peace Studies, and was going to grad school in the early 2010s—a time in which we were paying for these wars by borrowing. That seemed insane to me: we’re mobilizing, we have people dying, and yet at the same time we have these major tax cuts and Senators telling us to go shopping, to go to Disneyland. Everything was supposed to be “normal.” And I thought, something about this is not right. That’s how I started going down this rabbit hole of looking at how and why states pay for wars.

   KR: It seems like these days, while mentions of war are pervasive in the news and film and TV, it’s generally out of sight in ways it hadn’t been previously. In terms of your war finance continuum, this aligns with a shift to the low-salience strategy of borrowing—awareness of the war itself has diminished in tandem with awareness of the financing for it. There’s a distance between the war and the people involved directly in it, and the rest of the public.

   RCZ: Yes, that distance is interesting—and I believe money is the one thing that connects it all together. There was a Pew Study in 2011, on the tenth anniversary of 9/11, that asked respondents about the idea of sacrifice. It found that most Americans agree that those in the military are making a sacrifice, and that they’re sacrificing a lot. Yet those same people also have the mentality that “Well, this is what you signed up for.” The respondents in this survey didn’t value that sacrifice the same way the average American did during the Korean or WW2 era. And in the absence of this strong connection to the idea of sacrifice, many argue, one of the few connections citizens feel to a war effort is financial. I think this ultimately has to do with inequality. And this is the bigger problem: how these changes affect the redistribution of wealth in the United States.

   KR: I think for most people the connection between financing wars and redistribution is obscure—we think, oh sure you have to raise money for war, but what does redistribution have to do with it?

   RCZ: I just wrote a piece for Foreign Affairs on how wars can exacerbate inequality. There’s a simplistic version of this that says: We borrow for war, and it’s unfortunate because we put that debt on future generations and that’s awful… But that’s not where the story ends!

   The future burden of that debt servicing—paying back the war debt—falls on the entire tax base. And when we have tax cuts during wartime, like in the Bush, Obama, and Trump Presidencies, that’s going to fall on middle and low-income households, who eventually pay off much of the government debt.

   If you’re wealthy, or you’re a bank, you can buy government debt. So the government borrows from the rich and that money comes back to them with interest. Those middle and low-income households who can’t lend are taxed nonetheless, but never receive the interest payments—so when you pay for these wars by borrowing, there’s a huge redistribution of wealth from the middle and low-income classes to the wealthy. Thomas Oatley wrote an excellent book on this in 2015 that looks at how these wars—in particular Iraq and Afghanistan—have been paid for entirely by borrowing.

   It doesn’t have to be this way: we paid for WWI, WWII, Korea, by taxation and borrowing—which was done by lower and middle classes as well. And what happened was a huge redistribution of wealth downwards, which promoted the creation of a healthy middle class in the United States. That’s one example of how paying for war matters.

   KR: I’m interested in the change in public opinion you noted earlier—that Americans’ attitude toward the military have shifted to an, “Oh, you signed up for this” type of mindset. Why did this shift happen?

   RCZ: My intuition is that it was the shift to a volunteer force in the 1970s. This has further separated Americans. If I ask my lecture hall of 300 students, “How many of you know someone in the services?” Maybe 10 or 15 percent of the lecture raises their hands. But just a few decades ago, everyone would have raised their hand. The services are almost becoming a separate class: You marry someone in the service, your family has been in the service… the military is recruiting from a much smaller group of people. I think this separation—the idea of “don’t worry, just go to Disneyland”—has created a disconnect.

   KR: I want to ask about war finance as a sub-discipline within International Relations. When did war finance start?

   RCZ: The act of paying for war is of course itself very old. Any political entity—a state, an empire, a principality—that goes to war must mobilize its resources. Everyone quotes Cicero, writing in the first century BCE: “The sinews of war are infinite money.” This is true across time and space: you need resources to wage a war. From a more contemporary perspective, scholars who wrote during the world wars began to observe how wars were increasing in scale. However, this increase in the cost and scale of war didn’t really become a conversation in political science and International Relations disciplines until the 1970s and 80s. At that time there were comparative politics scholars—the most famous being Charles Tilly, with his dictum “war made the state and the state made war”—who began to look at the relationship between wars and state building. And International Relations scholars started to look at the sustainability of long-term military competition, in the context of the Cold War. But most of what I do, and what we understand as the current discipline, focuses on financing war in the immediate. This has really only taken off over the last decade.

   KR: Where do you think the study of war finance will be going in the future?

   RCZ: The question of the difference between inter-state and intra-state wars is where I see the field heading. By that I mean the financing of civil wars. I’m actually starting a new project on this, and I’ll say this: civil wars are inherently different than inter-state wars. We know that in these cases the state is divided. Think about borrowing for a minute: when the US borrows money, it has the treasury and the central bank ensuring that conflicts are funded, controlling the cost of war via interest rates, maintaining balance of payments and exchange rates, guarding against capital flight, and so on… These central institutions allow a state to run a war economy in a controlled manner. Today, no American is stressed out about the instability of our economy during a war.

   But during a civil war? Imagine the instability with no central institutions to comprehensively manage these factors. These conflicts are often in emerging market economies characterized by non-democratic regimes dealing with threats to infrastructure, a civil service that may or may not be loyal to the existing regime, the politicization of central banks, and so on. Studying these conflicts is a lot harder. There’s been a huge explosion in civil war literature, but there’s little work done on the financing of civil wars, and on the bureaucratic and organizational morasses that exist in the midst of them.

   KR: I imagine it’s much more difficult for us to get our hands on data in these cases. For example, the Nepali government—the people most invested in finding data on war finance—couldn’t obtain any information on the finances of their insurgent adversaries in the late 1990s. Is an acute lack of data a significant hurdle to people in this field?

   RCZ: Great question, I’d say no. Let’s think about the Cambodians and the Khmer Rouge. They got rid of money! Looking at that war, I can’t tell you in a dollar amount how much the war cost, but I can tell you how it was financed. If you care about processes, there’s still much to look at in terms of how these parties pay for the conflict. You’ll never get the numbers in the same way, but the processes can be determined. For example, Neta Crawford who works on the Cost of War Project at Brown, studies the numbers. She tries to tabulate the cost of interstate war, which is really challenging. But my interest lies in the processes.

   KR: I’ve recently read Jonathan Kirshner’s work on bankers and war. You’re a political scientist, but I wonder if you have thoughts about what people on the finance side of things can, or should be, asking about war?

   RCZ: I will say this: in a different time and place, the financial sector responded to the events of a war. If war went poorly for one state, the financial community reacted. I don’t think that sensitivity is there anymore. If anything wrong goes in Afghanistan, for example, I don’t think anything moves at all in the financing world. The financial community should have more awareness about their role in the process.

   KR: Something interesting about this question to me is that finance in general is predicated on expectations and deviations from expectations, but war seems to be chaotic, where tiny variables have significant and unpredictable impacts.

   RCZ: Yes, and today, what we’re doing militarily, from a financing perspective, seems very stable. The wars in Iraq and Afghanistan, Syria, and Yemen, are financed in a very stable way. The financing for these wars is so impressively stable that it feels like an aberration.

   KR: There’s another oddity in war finance: there are countries that don’t seem to be particularly wealthy, and you might wonder how they’ll be able to raise money, but they raise monopoly money.

   RCZ: I always thought that when a state runs out of cash, the war stops. This is completely untrue. Besides the case of the Russians during the Russo-Japanese war, I have never seen a case of an interstate war ending because of money. It doesn’t happen. Money isn’t an inhibitor because there are so many opportunities to get it. I went into this subject thinking the state has a finite number of resources: it does not. The state can print money, go outside the country, collect diaspora remittances. There are simply so many places where the state can procure resources that money is not a barrier.

   KR: Is there a general rule that states should raise as much money as humanly possible; that states should not only max out the credit card, but get as many credit cards as possible and max them all out?

   RCZ: No, actually, I wouldn’t say so. I think there’s a level of prudence. I think the idea of full economic mobilization is quite rare. Normally, mobilization is done in a prudent way. When done smartly, it’s trying to meet domestic needs as well as wartime needs. War does not subsume everything else, I don’t think, except in extreme cases (South Korea during the Korean War, for example).

   KR: How do you think other disciplines—or the average person—should engage with the study of war finance? And what can the discipline learn from outside itself?

   RCZ: First of all, I think all US citizens should be doing this: there has to be democratic accountability, and all citizens should be at least somewhat conversant in war finance, to understand where their money is going and what the effects are. Historians and economists who write about this bear a unique responsibility to communicate this information to the public. Sadly, I think economic historians are a dying subset of economics. But more broadly, everyone has something to learn and contribute to these conversations. These more abstract questions of value, money, and meaning can all help us understand why our societies pursue the policies that they do. The social sciences at large can learn a lot from this.

3. Cash Transfer, Knowledge Transfer

   December 14, 2018 12:00 am Comments Off on Cash Transfer, Knowledge Transfer

   An interview with Johannes Haushofer on the state of the evidence for cash transfers

   We’re pleased to introduce a new interview series for the Phenomenal World. We will be speaking with an array of academics and policymakers on the most ambitious yet tractable new ideas in the social sciences.

   Johannes Haushofer is assistant professor of Psychology and Public Affairs at Princeton University. His work includes development economics, behavioral economics, psychology, and neurobiology. We spoke to him primarily about a neopolicy idea on which he has unique expertise: unconditional cash transfers (UCTs). Along with Jeremy Shapiro, he has led research on GiveDirectly’s UCT program in Kenya, and his work on short-term and long-term effects there has both provided the field with new evidence and set a course for deeper questions. Now Johannes is starting to work on a UBI pilot in a major US city, across the developing-nation/developed-nation divide.

   We spoke to Johannes broadly about (1) where he sees the state of the evidence, (2) what conclusions can be drawn from developing nations to developed, and (3) his larger vision for the march of evidence regarding policies like this.

   We’re grateful that Johannes took the time to speak with us and to inaugurate this interview series. Interviewing him was Michael Stynes, who leads JFI, as well as Sidhya Balakrishnan of JFI. This interview has been condensed and edited.

   michael stynes: Johannes, first of all, thank you very much for speaking with us. Your work is incredibly important to the entire basic income/cash transfer research community and I’m happy that Sidhya and I will have the opportunity to talk through some of your work. We are particularly interested in the point in which a pilot intervention becomes viable policy. Here specifically I want to try to understand what the state of the evidence is in favor of unconditional cash transfers in the developing world, and how your research there might extend to the developed world. Can we start with an overview of the work you’ve done so far, particularly on cash transfers in Kenya?

   johannes haushofer: The main completed study that I’ve done so far is a randomized controlled trial [RCT] on GiveDirectly’s UCT program in Kenya, that we finished maybe five years ago, and published two years ago. In that study, we delivered transfers that are on average $700, which is about two years of per capita consumption, to poor families in western Kenya. And we found pretty sizeable effects on outcomes like consumption, asset holdings, psychological well-being, and income. That piece of evidence is part of a larger body of evidence, which is that cash transfers do a bunch of good things. So they increase consumption, and other welfare outcomes we care about. There are lots of studies that make us think that. And there aren’t a lot of the negative effects that people were original worried about—temptation goods, conflicts, violence, and so on. We’re just now working on a paper that shows pretty large decreases in domestic violence, as a result of cash transfers.

   I would say that the state of the evidence is: cash transfers do pretty good things. The 1.0 question for cash transfers is, “Is it better to get cash than to get nothing?” I think the answer to that is yes, it’s better to get cash. This isn’t surprising to many people, but it is surprising to some people who thought the poor are bad at handling money, and were going to blow it and make their lives worse.

   ms: On the temptation goods question: did you find that to be context-dependent? What I mean is, you could imagine a situation where a recipient has two choices, a certain kind of leisure or a very attenuated labor market in which there is only one job, which could be, say, working in a mine, which is miserable. And so cash, in this otherwise pathological society, would lead to people defaulting to temptation goods because it and a miserable form of labor market participation are the only options. There is some world in which that is likely, I would imagine. Did you see any variation? It’s heartening to hear that overall, that’s not where money was spent.

   jh: We didn’t see a lot of heterogeneity in the effects on temptation goods consumption. That’s true pretty much across the board: it doesn’t go up, if anything it goes down a little bit.

   Can I imagine groups that would increase their temptation goods consumption if we gave them cash? Maybe if you had a pretty serious addiction, you would increase it, but at the moment the evidence is not really there.

   sidhya balakrishnan: Evans and Popova found that cash transfers actually reduce temptation goods consumption.

   ms: So you have the study and attendant paper from 2016. And you’ve recently just completed another study.

   jh: Yes, now we’re doing a general equilibrium project, with Paul Niehaus, a founder of GiveDirectly, and Edward Miguel and Michael Walker at UC Berkeley. There, we’re interested in price effects mainly: is it the case that when you give these large cash infusions, no one is really better off, it’s just that prices go up? The answer to that seems to be no. We haven’t finished writing the paper, but it looks like prices don’t change a lot.

   ms: Is this based on your first cash transfer? Is this a basic income study?

   jh: No, this is a new study. It’s a much larger project, that is much better powered to detect price effects, that we weren’t so well powered to detect in the first study. In the first study, we did look at price effects and didn’t find any, but that was just a small number of villages. Now we have 650 villages, and $11 million in transfers, which corresponds to about 15% of GDP in these villages. That’s now a magnitude where you can compare it to a very large government stimulus.

   ms: In this new study, does every person in the village receive it, or a select group?

   jh: Everybody who is eligible receives it. GiveDirectly has now moved to a model where they give to everyone who meets the eligibility criteria, which in our new study was having a house with a thatched roof. We do study within-village spillover effects, but those are on ineligibles.

   ms: Do you see variation in price effects on different kinds of goods, e.g., landlords do increase rent but shops don’t increase prices?

   jh: We haven’t broken it down yet into very small, granular categories. I can say that at the coarse categorical levels of durables, non-durables, and temptation goods, we don’t see effects. We haven’t looked yet at, for example, does fish become more expensive, does meat? In first study, we saw a decrease in the price of fish, for whatever reason, though that could have been just a fluke. In this new study, we don’t know for the individual categories quite yet.

   ms: So you have the 2016 study, and this new study on price effects. What else are people doing on unconditional cash transfers?

   jh: So, as I mentioned before, in cash transfers 1.0, the question is, “Is cash better than nothing?” Now, the next important question is, “Is cash better than other stuff we could be doing with the cash instead?” There was just a really cool study by Craig McIntosh and Andrew Zeitlin where they compare GiveDirectly transfers to a USAID program in Rwanda. They find that neither the nutrition program nor the cash transfers at the same magnitude have a lot of impact, but much larger cash transfers do have impact. So that’s a really great first step in the direction we need to go in. We need to see: where is cash useful, and for what is it useful? I’m involved in a study in Kenya just now where we’re giving either cash, or psychotherapy, or both, or nothing, to a group of people who either start out depressed or healthy. The idea is to see: which of the two is more effective? Are they most effective in combination? Which groups of people is each intervention most effective for?

   ms: This reminds me of other interesting work you did–your paper called “Depression for Economists.” Did that inspire this study? Could you explain that a bit?

   jh: That paper was a reflection of my increased interest in depression over the last few years. That in turn comes from my original interest, which was about psychological mechanisms that perpetuate poverty. I originally had this thought that maybe poverty leads to stress, and stress impairs your ability to make economic decisions, which leads to more poverty, and so on. That second link, the link from stress to economic decisions, I think it looks pretty weak at the moment. The lab evidence is kind of there, but it’s not like stress has really large effects on patience or related variables. So I looked for other mediating psychological variables, that could be a psychological poverty trap, a true trap, in the strong sense. Depression seemed plausible, so I got interested in that. It’s definitely a consequence of poverty, and very likely a negative contributor to labor market outcomes.

   ms: You have a specific definition of depression in the paper. It’s actually a microcosm, in certain respects, of economic depression—a belief in diminished returns.

   jh: Exactly. We started by asking, what does depression even mean? That’s when I went and read the diagnosis criteria in the DSM-5, and those originally proposed by Beck. That’s how psychiatrists diagnose depression. When I read through this list, the criteria seemed to be related, to a surprising degree, to economic primitives, and specifically beliefs about the returns to effort. Depression is characterized by pessimistic beliefs about whether your efforts will amount to anything, whether it’s even worth getting out of bed in the morning, whether you’re just a burden on others… The thrust of that paper was to see how much mileage we can get if we use the language of economics in understanding the symptoms of depression. The claim is that many of these symptoms actually look like pessimism about the returns to effort. So far that’s just a theoretical exercise, to reconceptualize depression a little bit, for those of us who have economics training. But we’re going to try to do some empirical work to see what really changes in depression. Do beliefs about returns to effort truly change? That would be the prediction.

   ms: Would that be a lab study?

   jh: We’re doing that in the context of an existing psychotherapy RCT in India. You can’t induce depression, so the way to study it is to alleviate it and to see if that has effects on the variables you care about. There’s an existing study that randomly administered psychotherapy, or not, to depressed people, run by Vikram Patel and colleagues, and we are currently following up on this study with a team that consists of Gautam Rao from Harvard, Frank Schilbach and Pierre-Luc Vautrey from MIT, and Jonathan de Quidt from Stockholm to understand to study the effects of that treatment on psychological and economic outcomes; beliefs about returns to effort, time and risk preferences, and so on. Many of these measures are collected in a lab-in-the-field type setting.

   ms: How would cash intervene in depression, intervene in people’s beliefs in a way that would stimulate a change? Versus psychotherapy? For example, could it be the case that cash could give you a boost in your mood–which might be enough to help someone over a hurdle, to get them seeking help? I could imagine that cash could get someone increased access to different kinds of labor market opportunities–you’d now have money to take a bus to do an interview further away. Another way to frame this is: especially if you’re impoverished, there could in fact be low returns to your effort, in many contexts, making a belief in low returns to effort an accurate representation of your circumstances. And then the cash, in such a situation, might raise you to a new income level at which your returns to effort are in fact higher.

   jh: I think that’s the best answer; cash could enable you to make investments that raise (or even just remind you of) your own productivity, and then potentially change those pessimistic beliefs. Now, this isn’t a watertight argument, because our point of departure was that, if you suffer from depression, you misattribute the things that happen to you; e.g., a negative shock is attributed to your abilities, a positive shock is attributed to luck. In that case, a cash transfer wouldn’t necessarily translate into less pessimistic beliefs about returns. But it might get you back to sampling the world. In the economic model in our paper, one of the mechanisms by which people get stuck in a trap in is that they stop learning about potential returns. So when you get a negative shock, you may transiently have pessimistic beliefs, but over time, if you’re still sampling the world, you learn the truth. But if the shock is large enough, it could lead you to a point where you stop sampling the world. And if the cash transfer is large enough to make you do that again, then you could over time learn your true returns again. This could be a mechanism that acts in concert with what you were saying–now your returns are higher just because the cash makes them so.

   ms: To return to cash, let’s review where we said the state of the evidence lies. You introduced a distinction between 2 counterfactuals: Cash 1.0: where the counterfactual is no cash, and Cash 2.0, where the counterfactual is comparably expensive interventions. You mentioned initial work there. I’d like to introduce another distinction, between one-off transfers that are meant to spark a new economic trajectory, and longer-term transfers such as basic income. Is that a relevant distinction in developing country contexts? Does that complicate the evidence you described?

   jh: Yes, I think it is different in the sense that these long-term transfers, if they are truly unconditional basic income that you get forever, would represent a change in your permanent income. That means you should adjust a whole bunch of things, including consumption levels, for the rest of your life, and so that makes different predictions from these one-off transfers. If you take the strictest model of the permanent income hypothesis, then a single, one-time cash transfer wouldn’t change your consumption much at all — it’ll change it by the returns on the transfer, which in these contexts are not zero, but they’re not super large either. But it’s still interesting to ask what are the effects of these short-term transfers, because those are feasible from a policy perspective. And it turns out that the effects are actually larger than many of us expected. Even in terms of long-term outcomes, there’s some evidence to suggest that they’re useful. Asset holdings are still higher a couple of years later. Other evidence, e.g. recent work by Chris Blattman and colleagues, suggests more modest long-term returns. And on the really long term results, the jury is still out.

   ms: Let’s stick with the developing-world context for the moment more, before we try to transfer the evidence to the developed-world context. At what point, from your view, which I acknowledge is not a policymaker’s view, does evidence cross the threshold to be able to claim that cash transfers are a good policy for a wide variety of policy objectives, poverty reduction, wellbeing goals, and so forth? At what point can you say, “This is likely to be an effective policy?” If we aren’t there yet in the developing context, what else needs to be proved?

   jh: That line is crossed when there is solid, probably randomized controlled trial or some other good identification strategy evidence, that the policy works. By works, I mean, it affects outcomes that policymakers care about. For cash transfers, we have pretty good evidence that for short and medium run they do have those positive effects. Then, there’s a second question, which we talked about earlier: if you’re choosing from a menu of options, which one should you choose? And that’s a question that scientists can’t really speak to–it hinges on what you, as a policymaker, prioritize. It depends on what variables you care about more than others. Now obviously, if one of these interventions costs as much as the other but dominates on every outcome measure, that’s a no-brainer. But often there are tradeoffs, and those are tradeoffs that policymakers need to make. So do you choose the one that’s better on education and worse on consumption, or vice versa?

   ms: Or even, for instance, how much do you as a policymaker understand your constituents to value autonomy? Is that an independent value?

   sb: I have a segue from that. Where do you stand on conditionality of cash? My own perspective is that it works differently for different research questions.

   jh: Again, it depends on what you want to achieve as a policymaker. If you really care about health and education outcomes, maybe you want to make it conditional. The downside of conditionality transfers is that you often can’t reach the very very poor, because they have trouble fulfilling even the very mild conditions that you put on the transfers.

   sb: In addition to that, the arbitrary means test can leave out people just marginally above it.

   jh: Yes—I would put a lot of weight on the extremely poor and making sure they’re not excluded. That biases me a little against conditionality. But that’s also partly true because the effects on the outcomes that you’re conditioning on are there, but the welfare gains are not so massive or important that we can’t afford not to have them, and that leaving out the ineligibles or the people who can’t meet the conditions is justified. So, if I were a policymaker, I would have some combination of both, and try to get the truly poor people with unconditional transfers, then for people who can afford to meet conditions. That seems like a useful combination.

   sb: Likewise, do you have a strong perspective on in kind versus cash?

   jh: It’s been a while since I caught up on that literature. My sense is that often in-kind transfer programs are at least partly extramarginal. And so, from that perspective, and also from the perspective that when you just give money there’s no good evidence that people are throwing it away and buying stuff that no policymaker would want them to buy–I don’t see a strong argument for in-kind transfers. Unless you’re in a setting where markets aren’t functioning well, for example, if you can’t actually buy things, or there’s price-gouging.

   ms: To follow up on that: is the burden of proof on the in kind side or the cash side? It seems like you ought to have, as a policymaker, a strong reason for thinking that your constituents can’t represent their preferences well.

   jh: Right, but where the burden of proof lies depends on where you start as a policymaker. If you’re in the world where cash has always been this preposterous idea, “Of course people are going to waste cash, we should be giving out rice instead,” then obviously the burden of proof is on cash transfers. For economists, the burden of proof is on the in-kind intervention; we would ask, “Why would we expect in-kind to be better, ever?”

   ms: To the last theme: the transferability of evidence from developing contexts to the developed world. In the last 18 months, I’ve seen a number of new pilots in the United States, and Ontario and Finland had significant PR events, let’s say. Having conducted most of your research in the developing world, how do you think about applying that to the developed context? I understand that, from an academic perspective, obviously there are serious limitations to that extrapolation. In an expanded view, how do you think about that, and where can evidence from the developing world play a role in a developed country’s UBI research, in pilots or policy?

   jh: Cash transfer studies from the developing world can provide motivating evidence and hypotheses. There are two things I would say: the first is that there are definitely cultural differences, but at the same time, people are people, and many of the economic behaviors that are relevant are probably fairly universal. From that perspective I’d be optimistic about knowledge transferring. The second thing to say: That’s true a forteriori, in the sense that, in order for you to think cash transfers would work differentially well here versus a developing country, you’d have to think the population you’re targeting is somehow different in one place versus another. I could see somebody saying, “Well, in Kenya everybody’s poor, so you’ll get a mix of very able and some less able people when you give cash transfers.” In contrast, for programs in the US they might say, “The people who know how to handle money have already made it, so you’re only getting the bottom of the distribution, the people who don’t know how to handle money.” That would be an argument that would lead you to be skeptical about whether cash transfers would work here. But I’m not a believer in that argument, because my sense is that there’s enough randomness here, in terms of starting conditions, socioeconomically, in terms of race and ethnicity, to make it the case that there are plenty of poor people who happen to be poor by bad luck, not by some “deficiency”. And so I’m optimistic.

   ms: And not just deficiency in navigating the labor market, because even if you there were a deficiency specifically in handling the labor market, you could presumably have no deficiency in managing your own consumption. In which case it would still be a benefit. It would have to be a pretty robust thesis of deficiency.

   jh: Yes, it would have to be that you’re a bad decision maker in any area of life.

   ms: Interesting—this is a higher degree of confidence than I thought you were going to give. That’s exciting for our work.

   sb: We’ve been wondering a lot about transferring evidence from developing to developed countries. Those two contexts are quite different as far as systems, markets, and institutions are concerned. They’re systematically different. Welfare systems are different. If a cash policy has to become a policy in the developed world, it’s more a replacement of an existing welfare system, whereas in the poorest of the poor countries, you’d be building it from scratch: it is the welfare system. We see differences also in the way that cash transfers are administered, in pilots or experiments. In developing countries, it’s nonprofits or academic researchers. In developed countries, it’s increasingly public-private partnerships, with city and state governments. I think that would change the game quite a bit, in terms of what kinds of evidence we’d be able to say are similar. They are operating in different institutions and markets.

   jh: Yes, I totally believe that that’s plausible. Tessa Bold and colleagues just published a paper on teacher hiring and contracts in Kenya, where they show that the same program, administered by an NGO versus the government, has completely different effects. I’m sympathetic to the point of view that how things get implemented is super important. And the partner organization, or implementing organization, is only one way in which that can matter. The institutional context more broadly is super important. I guess what that means: if you’re translating a policy into a new area, you have to make some educated guesses about how the institutional context is going to be different, and adjust accordingly.

   sb: That’s extremely hard to do. First, you rarely get effects sizes from studies, they don’t support it. Second, even if you want to do preliminary power calculations, you have to hypothesize the effects, which is hard when you don’t know how a public-private partnership of cash works in developed contexts. So, it complicates your experimental design quite a bit.

   jh: Absolutely, and I think there’s a blind spot in this literature: the attention to implementation context. There’s a whole area waiting to be opened up there, which is partly done by this paper. That should be studied more.

   ms: Ending this line of questioning, I’ll ask for a summary. At the highest level, where does the evidence stand? It sounds like at the micro and meso, and even the macro level, which you’ve begun to looking at, confidence in its efficacy, even when the counterfactual is in-kind or conditionality, is improving significantly. Is that fair to say?

   jh: I think that’s right. There’s pretty good evidence that it does good things, and I think open questions are: Is it more effective than other stuff? What are the medium- and long-term results? And how important are the spillovers?

   ms: And it’s a closed question that it does not increase spending on temptation goods?

   jh: Closed is a strong word, but there’s pretty solid evidence now that there’s not a lot of that.

   ms: Do you have any last words you’d like to add?

   jh: There are two things I’d like to say in the cash transfer debate that get brought up in comments online and elsewhere. One, there is a sense in which, if we think the poor are adults who should be making their own decisions, we shouldn’t even necessarily be studying what they do with the money, because they, by definition, know best what to do with it. That’s worth having in the back of our minds, as we opine on whether they’re using transfers wisely. In these conversations around, are these transfers spent on good things or bad things, we ought to keep in mind that there’s an argument that we shouldn’t care. Two, these are randomized experiments, and I want to emphasize that that we’re always very careful in our work to treat people as respectfully as possible. Sometimes the public misperceives this, and thinks that we are treating people as guinea pigs. But that isn’t true, everyone joins voluntarily, and they get a token of appreciation for their time, even when they’re in the control group.

   ms: Thank you for everything, this has been fascinating.