We know that cash transfers reduce poverty, improve health and enhance education but what impact do they have on how people feel and think about their lives? We find that cash transfers have a small, positive effect on subjective wellbeing, one that lasts for several years.
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The final version of this paper was published in Nature Human Behaviour on 20 January 2022.

This version is an earlier working paper published in November 2020.

Abstract

Background: A large body of evidence evaluates the impact of cash transfers (CTs) on physical health and economic indicators in low- and middle-income countries (LMICs). A growing amount of research on CTs contains measures of subjective wellbeing (SWB) and mental health (MH) but no attempt has been made to systematically synthesize this work.

Objective: To evaluate whether CTs improve the SWB and MH of recipients in LMICs.

Methods/design: ​We undertook a systematic review and meta-analysis of randomised controlled trials (RCTs) and quasi-experimental studies, including peer-reviewed publications and grey literature (e.g. reports, pre-prints, and working papers), conducted over the period 2000-2020, examining the impact of CTs on self-reported SWB and MH outcomes. A protocol for this review was prospectively registered with Prospero (CRD42020175464).

Results: Thirty-seven studies were included in our meta-analysis, covering 100 outcomes, and a total sample of 112,245 individuals. After an average follow-up time of two years, the average effect size on MH and SWB is estimated to be 0.10 standard deviations (SDs). CT value, both in absolute terms (=0.08 SDs per $100 PPP) and relative to previous income (=0.10 SDs for each doubling), are strong predictors of the effect size.  Moreover, unconditional CTs have a larger impact than conditional CTs (=0.04). The impact of CTs diminishes marginally over time (=-0.02 SDs per year). We find no significant evidence of negative spillover effects to non-recipients.

Discussion: Cash transfers significantly increase MH and SWB in LMICs. More research on longitudinal (5+ years) and spillover effects is needed. Future impact evaluations should collect data on MH and SWB to enable comparisons of the relative cost-effectiveness of development interventions at improving people’s wellbeing.

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