Over the past decade there has been a surge of interest in a novel approach to helping the world’s poor: Instead of giving them goods like food or services like job training, just hand out cash — with no strings attached. Now a major new study suggests that people who get the aid aren’t the only ones who benefit.

Edward Miguel, an economist at the University of California, Berkeley, and a co-author of the study, says that until now, research on cash aid has almost exclusively focused on the impact on those receiving the aid. And a wealth of research suggests that when families are given the power to decide how to spend it, they manage the money in ways that improve their overall well-being: Kids get more schooling; the family’s nutrition and health improves.

But Miguel says that “as nonprofits and governments are ramping up cash aid, it becomes more and more important to understand the broader economy-wide consequences.”

In particular, there has been rising concern about the potential impact on the wider community — the people who are not getting the aid. A lot of them may be barely out of poverty themselves.

Researchers Find A Remarkable Ripple Effect When You Give Cash To Poor Families

Photo: Nichole Sobecki for NPR
Caption: Denis Otieno and his daughter plant a cypress sapling purchased with money received from the charity GiveDirectly back in 2017. More recently, the charity teamed up with researchers to study the impact of cash grants on the wider community.