Does 'Soft Conditionality' Increase the Impact of Cash Transfers on Desired Outcomes? Evidence from a Randomized Control Trial in Lesotho

37 Pages Posted: 30 Nov 2016

See all articles by Noemi Pace

Noemi Pace

Ca Foscari University of Venice - Department of Economics

Silvio Daidone

Food and Agriculture Organization of the United Nations

Benjamin Davis

United Nations - Food and Agriculture Organization (FAO)

Luca Pellerano

International Labour Organization (ILO)

Date Written: November 18, 2016

Abstract

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

Keywords: cash transfers; consumption; food security; impact evaluation; randomized experiment; soft conditionality

JEL Classification: C93, D12, I38, O18

Suggested Citation

Pace, Noemi and Daidone, Silvio and Davis, Benjamin and Pellerano, Luca, Does 'Soft Conditionality' Increase the Impact of Cash Transfers on Desired Outcomes? Evidence from a Randomized Control Trial in Lesotho (November 18, 2016). University Ca' Foscari of Venice, Dept. of Economics Research Paper Series No. 33/WP/2016. Available at SSRN: https://ssrn.com/abstract=2876458 or http://dx.doi.org/10.2139/ssrn.2876458

Noemi Pace (Contact Author)

Ca Foscari University of Venice - Department of Economics ( email )

Cannaregio 873
Venice, 30121
Italy

Silvio Daidone

Food and Agriculture Organization of the United Nations ( email )

Viale delle Terme di Caracalla
Rome, 00153
Italy

Benjamin Davis

United Nations - Food and Agriculture Organization (FAO) ( email )

Viale delle Terme di Caracalla
Rome, Lazio 00100
Italy

Luca Pellerano

International Labour Organization (ILO) ( email )

Route des Morillons 4
Geneva, 1211
Switzerland

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