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ThomasSittler comments on Cash transfers are not necessarily wealth transfers - Effective Altruism Forum

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Comment author: ThomasSittler 02 December 2017 03:13:18PM *  4 points [-]

Thanks for the post! There's actually a lot of existing literature on these topics.

Regarding the effect of cash on happiness, Haushofer, Reisinger & Shapiro (2015) have a paper called "Your Gain Is My Pain: Negative Psychological Externalities of Cash Transfers".

If you are in fact skeptical of the meaningfulness of your income as a metric, you should be similarly skeptical of the meaningfulness of variations in income of people in poor countries

Maybe I misunderstand you, but the whole point of cash transfers is that money matters more for quality of life when you are poor. See 80,000 Hours' review.

The (lack of) productivity effects of (primary) education in developing countries have also been studied, although I'm less familiar with that literature. However, Haushofer & Shapiro (2016) find that as a result of the cash transfers, "education expenditures increase by USD 1 PPP", while overall expenditure on non-durable goods increases by 36 USD PPP. (Table V).

Comment author: MichaelPlant 07 December 2017 03:06:59PM 1 point [-]

Like Tom, I'm a bit uncertain as to the target or upshot of your argument. Are you claiming that GD's wealth transfers go to status goods and therefore they won't increase happiness? If so, then Tom pointing out not very much money goes on education would seem to undermine that, unless you think the rest of the expenditure is status goods too.

Another argument you could make to undermine cash transfers is that the non-comparative part of their effect (presuming it exists, which is probably does) is just quite small or short lived. In the 'Your Gain Is My Pain' paper on p32 they show the effect only lasts a few months. I discuss this in my EAG London talk which I'm hoping will go up soon. Basically I don't cash transfers do nearly as well in terms of life satisfaction as mental health interventions. So we should just fund MH interventions instead, in as much as we're concerned about the happiness of recipients.

Comment author: BenHoffman 02 December 2017 09:53:42PM 1 point [-]

There's an implied heuristic that if someone makes an investment that gives them an income stream worth $X, net of costs, then the real wealth of their society increases by at least $X. On this basis, you might assume that if you give a poor person cash, and they use it to buy education, which increases the present value of their children's earnings by $X, then you've thereby added $X of real wealth to their country.

I am saying that we should doubt the premise at least somewhat.

Comment author: ThomasSittler 02 December 2017 11:35:11PM *  0 points [-]

I have no disagreement with that :)

Still, I don't actually see that much evidence that recipients spend the money on positional goods to a significant extent. To simplify, they seem to mostly buy food and productive assets.