Google-Funded Study Finds Cash Beats Typical Development Aid (wired.com) 117
Traditional international aid programs typically offer some combination of clean water, livestock, textbooks, and nutritional supplements. A new study funded by Google.org and the US Agency for International Development asks whether the poor would benefit more if they were given cash and free to spend the money as they see fit. Wired: Researchers had two goals: compare an established program to combat childhood malnutrition with giving people the equivalent value ($117 per month) in cash, and compare the cash equivalent to a much larger sum, $532 per month. After a year, results [PDF] released Thursday found that found that neither the established program nor its cash equivalent were able to improve child health, but the large cash transfers significantly improved people's health and financial standing. On the surface, that's not surprising. Of course giving people more than four times as much money gives them access to better nutrition. But the study's co-author Andrew Zeitlin, a professor from Georgetown, says the idea was to provide benchmarks for future programs; it's not unusual for nutritional aid programs to cost $500 or even $800 per month, he says.
The traditional malnutrition program, called Gikuriro, was funded by USAID and administered by Catholic Relief Services. It combined help with water, sanitation, and hygiene with training on nutrition, some small livestock and seeds, and guidance on financial habits like saving. The study focused on households with children under the age of 5 and women of reproductive age, with an emphasis on the first 1,000 days of the child's life. The results indicate that Gikuriro helped recipients increase their savings and increased overall health knowledge and vaccination rates in villages, two of the program's goals. However, neither the malnutrition program nor its cash equivalent led to a more diverse diet, or improved child health, as measured by height and weight. The larger cash transfer, on the other hand, led to improvements in food diversity, a drop in child mortality, an increase in household wealth, and improvements in child health measurements, as well as improvements in village vaccination rates.
The traditional malnutrition program, called Gikuriro, was funded by USAID and administered by Catholic Relief Services. It combined help with water, sanitation, and hygiene with training on nutrition, some small livestock and seeds, and guidance on financial habits like saving. The study focused on households with children under the age of 5 and women of reproductive age, with an emphasis on the first 1,000 days of the child's life. The results indicate that Gikuriro helped recipients increase their savings and increased overall health knowledge and vaccination rates in villages, two of the program's goals. However, neither the malnutrition program nor its cash equivalent led to a more diverse diet, or improved child health, as measured by height and weight. The larger cash transfer, on the other hand, led to improvements in food diversity, a drop in child mortality, an increase in household wealth, and improvements in child health measurements, as well as improvements in village vaccination rates.
This is pretty old news. (Score:3)
Back in the 1980s, more than one study showed that the bureaucratic overhead of the multitude of welfare programs was stupendously high.
Much cheaper to just give poor people the money.
Re:This is pretty old news. (Score:5, Insightful)
And what I heard in the 90s was that giving money to the citizens of impoverished nations (let's be direct and say Africa here) just meant that the money ended up in the pockets of that country's government. Those guys had much less use of, say, a sack of goat feed.
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You heard wrong, because "aid to the government for the people" is radically different from "cash directly to the people".
Re: This is pretty old news. (Score:2)
Fortunately you'll never be awarded enough responsibility to have to put your money where your stupid mouth is.
Even RMS has a policy of not giving cash to pan... (Score:4, Interesting)
> Fortunately you'll never be awarded enough responsibility to have to put your money where your stupid mouth is.
That's just a lame way of saying that you don't have a useful counter argument. In real life, foreign aid gets funneled through multiple intermediaries. ANY of these can skim or steal the whole thing.
Having a fat wad of cash is dangerous in any poor area. You don't need to have gone to Africa to understand this. Some less than "privileged" life experience could have clued you in to this.
Beyond that, we have ample examples from lottery winners of what happens when you give people money when they aren't used to having it.
Again, even those extreme examples aren't even really necessary if you aren't hiding in the suburbs with your head up your ass.
I can point to personally observed examples of poor people being retarded with their money.
Even RMS has a policy of not giving cash to panhandlers.
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This is why they did the study rather than relying on gut instincts.
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Nice racism you got there/ I bet your typical African street survivor has more "Sk1lz" than you do.
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You heard wrong, because "aid to the government for the people" is radically different from "cash directly to the people".
"Cash directly to the people" frequently doesn't *stay* with the people, and even less frequently does it acutally *go* to the people.
Lets say there's an African state that receives charity (almost all do, but I'm going to go nameless on this): to give the cash directly to people who can spend it the US dollar is used to *buy* cash from the state, at which point the state merely prints worthless local currency and takes the dollars - "money" went to the people but it was the worthless local stuff while the
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Well, that's a good point. I think it is the inverse of the first comment about European guilt in the extraction of resources but it is a significant problem I've heard in parts of Africa and obviously the middle east suffers from a form of this also. The Congo specifically has had some articles written about how it is cursed by its natural wealth. I have trouble though with the notion that we should rationalize African countries instabilities as being due at once either:
a) to the extraction of resources we
They said the same thing about food aid (Score:2)
They want you to accept the world as is. That nothing you ever do or try will make the slightest difference. Funny thing is this study says cash is more effective, but that must mean that both cash and food aid are effective, since you
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Exactly. I have very little experience with poor countries, but everything I've heard anecdotally leads me to believe that in practice it's likely that in most cases very little of the cash targeted for the poor will trickle down to them. It'll likely do wonders for the president for life, some ministers and the local Mercedes importer and his family though.
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Economists have been beating politicians over the head with this for decades now.
It's not even bureaucratic inefficiency and overhead that is the big problem, it's that these programs create bad incentives and market distortions that severely hamper the overall benefit.
If you're going to give people money, just cut them a check. Evidence clearly shows that is leads to superior outcomes.
The notion that you need to add strings to aid money is misguided, paternalistic, or even downright racist.
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Much cheaper to just give poor people the money.
Depends on what sort of "aid money" we're talking about. If you give cash to a third-world shithole, it ends up in the Swiss bank account of the dictator, and the people get nothing. The less marketable the aid, the less can be stolen by the government, so even if the aid itself is less use to the poor you're trying to help, they still came out ahead.
Similar, giving cash to a drug addict will in no way help either the drug addict nor their starving children. But there's certainly efficiently in just givin
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I've done a lot of development work and I always though the most effective money spent was what I put into the local economy paying people for food, stuff, drivers, etc.
Jobs instead ! (Score:2)
Don't give free stuff. It will not be used respectfully.
Don't give cash. It will not be used sustainably.
Give jobs and allow a working industrial economy to take place. That's the only sustainable thing to do.
Sure (Score:4, Interesting)
Re:Sure (Score:5, Insightful)
Isn't this one of the basic ideas behind free markets. The invisible hand at work. Why should we assume that what someone from a third world country needs is a cow. I think avoiding cash is based on people's general tendency to want to control others. Don't want them to do something with their charity that they don't approve of with the money.
Came here to say exactly this. Giving aid directly in the form of cash empowers the people on the ground to use it to best fulfill their needs. The biggest opponents of this kind of thing are the puritanical folks who don't want a single charitable dollar to be used for any non-necessary (in their opinion) expenses.
That said - this kind of thing does need to be implemented thoughtfully, because it's easy to imagine that organized-crime types will find ways to exploit this to enrich themselves off of charitable giving. As with most things, it all comes down to diligence in the implementation.
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On the one hand, you are not helping a drug addict by giving them money. OTOH, so what? Anything you do give them just gets sold, and you're just making it less efficient for everyone else.
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Anything you do give them just gets sold, and you're just making it less efficient for everyone else.
If the government gives an addict money, the addict buys drugs. No question here really. But what if you pay their rent instead?
If the government pays an addicts rent, then at least the addict has a house. To your point, the individual could rent that house out and use the money for drugs, but at least the addict has a house, and there is a resident, and the landlord gets rent. So now the landlord can afford to maintain the house, which maintains the housing value in that area. You also generally know
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If the government pays an addict's rent, the addict rents out the place (perhaps to 6 other addicts) and uses the money to buy drugs. That's the world of an addict - there's nothing you can give him that won't be sold to buy drugs, at some point in the downward spiral.
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We do that. The limitations are:
1) Money
2) It is voluntary.
3) It is not terribly effective when the person is mentally handicapped or has no education or job skills.
It's tough.
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The biggest opponents of this kind of thing are the puritanical folks who don't want a single charitable dollar to be used for any non-necessary (in their opinion) expenses.
The biggest opponents of this kind of thing are people who have worked with homeless, or mentally handicapped individuals who don't know how to handle money, or are taken advantage of. The modern welfare systems in the US and Europe do this because experience shows that if you want someone to have a roof over their head, the best way to do that is to put a roof over their head.
That said - this kind of thing does need to be implemented thoughtfully, because it's easy to imagine that organized-crime types will find ways to exploit this to enrich themselves off of charitable giving. As with most things, it all comes down to diligence in the implementation.
Well said. People need to realize that this study wasn't about the welfare system in the US. The situation on the ground in Rwand
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People aren't any different just because they are on the other side of the planet. I bet if I asked Rwandan nursing home worker, she would have an equally dire view of her own poor relations that I have of mine.
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I bet if I asked Rwandan nursing home worker, she would have an equally dire view of her own poor relations that I have of mine.
*facepalm* They don't HAVE nursing homes in Rwanda.
To a Rwandan, the idea of putting your elderly parents in a facility is abhorrent. They love their parents, and they would go poor rather than give them to someone else to care for. The idea of a "nursing home" as you might see in the US would be alien to them. You imagine a place where professional nurses change elderly diapers, take them to the hospital upon emergencies, give them their medication, and resuscitate 70-year-old grandma if they have a he
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The homeless industrial complex is just as self serving as any other group of people.
"Free Markets" (Score:1)
What's with people using the phrase "free market" when talking about direct government intervention.
a) Well run aid organizations (yes, there are several) have local people who understand what the local people need. Rich westerners may buy another water system or some such shit, but rich white people throwing money doesn't work.
b) Directly giving cash to the poor works has been demonstrated to work much better in a very small scale,
c) Directly giving cash to the poor creates horrible inflation on the medium
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c) Directly giving cash to the poor creates horrible inflation on the medium and large scale
This is the major flaw here. And will there be enough food to actually sell at that scale? Suddenly there's a market for more food that wasn't actually grown/raised - nobody is going to create food that will otherwise go to waste.
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No markets are actually free, I use it as a short hand for the idea that maximizing people’s choices tends to provide better results. Instead of me telling someone what they need to improve their lives, let them decide.
Your points about scale are well made.
Being responsible with my resource Do they want it (Score:2)
I'm going to agree with you in part and disagree in part.
> Isn't this one of the basic ideas behind free markets. The invisible hand at work. Why should we assume that what someone from a third world country needs is a cow.
One should certainly at least ASK someone what they need and want before spending a lot of money getting them something that they might not even want.
There can also be an arrogance among certain communities in the west where think they know better what people need. They feel sorry for
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I also agree there are places where putting cash out there might not be the best idea, but warlords can just take the food, water, cows etc. too.
General question is what is the point of charity. Everyone can have thier own answer, I would just like mine to provide the maximum benefit to improve lives/minimize suffering.
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I think avoiding cash is based on people's general tendency to want to control others. Don't want them to do something with their charity that they don't approve of with the money.
Well, yeah. Whats the problem with that line of thought? Would you give charity to a pimp? Why not?
Charity is voluntary, and if someone wants to make sure that someone else eats (by giving food) that's fine. If they want to make sure that someone else eats but does not trust that recipient to buy food, where's the problem?
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I didn’t say there was a problem, you are obviously free to do what you want. I wouldn’t even say that sending food is bad in any way. Maybe it isn’t the best way to maximize improvement in their lives. However, maybe that isn’t what people are going for.
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The study was looking at international poverty, not pimps.
Who cares - if you are going to attach your morality to your donation you don't get to complain when others do the same.
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I think avoiding cash is based on people's general tendency to want to control others.
We used to (and still do) give people lots of cash. The problem is that it isn't spent sustainably. The idea behind giving them livestock is that livestock can create a sustainable source of income. This study found that neither approach actually addressed the thing that they are actually trying to solve. The study doesn't conclude that we should just give people cash. It concludes that neither approach solves the underlying problems, so we need to try something else.
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For a long time, and still in effect, is a strong paternalistic approach to aid. The aid recipients are treated more like children unable to handle their own affairs. If a small US business asked for a loan then they'd get a cash payment if approved; but for foreign aid that money comes with heavy requirements, restrictions, and hurdles. Then add in political nonsense and you're forbidden from using that money for sex ed and other things some senators find controversial.
You're wrong, also FUCKING MISLEADING HEADLINE (Score:2)
For Fuck's Sake Slashdot. Fix your damn headlines.
Google's experiment showed no difference between $117 in cash, and $117 in stuff. However, it turns out, $534 in cash gives a much better outcome. The result isn't "cash is much better than stuff." It's "$117 isn't enough, and you really need to get closer to $534."
It's sad that, since this information was in the fucking summary no one read it. But to have self-congratulatory backslapping about the free-market is nonsense on top of that. The free mark
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This reminds me of how it was found that when poor Africans were given mosquito netting to help combat malaria, the netting was was used as fish nets instead. Presumably they wanted fish to eat/sell more than they wanted to avoid malaria, which is probably reasonable if they were undernourished. If cash were given to them, they'd have bought (more effective) fish nets in the first place instead of mosquito nets.
So you're telling me... (Score:1)
Re:So you're telling me... (Score:5, Insightful)
Comment removed (Score:5, Insightful)
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Give them $100 in cash and their dictator gets $100 and they get nothing.
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Perhaps, but it's a bit less fungible. Put in a water pump and that hard to sell off. Medical care is tricky - any drugs are immediately stolen and sold, but training locals to be first responders [internatio...lcorps.org] can be a real help. Teaching people to read can also be a big win, and subtle blow to dictators and theocrats. Doubly so teaching girls to read [roomtoread.org] in shitholes where that's outlawed.
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Summary contradicts you. There were measurable improvements to their lives. Promises of future money can be used to obtain transportation away from the ones stealing your money; or bodyguards to protect you from them. Digital wallets can be used to prevent graft, rather than sending paper bills.
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Yes, sure, but how then will we make a profit with our charity?
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Give a third worlder $100 worth of food aid, you are transferring that much food from the US.
That statement sounds logical, but it isn't what this study was about. They were not buying food at US prices then sending it over to Rwanda. They were buying things like livestock and seeds, at overseas prices, and giving them to the participants, along with training on how to use them.
misunderstood (Score:1)
This doesn't mean that cash makes for very good aid, it just means aid programs suck so badly, that even giving the aid as cash is better than what they are doing. Handing out cash is still a lousy way to help anyone.
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Handing out cash is still a lousy way to help anyone.
Yup. It's the worst, except for all the others.
CORRECTION (Score:5, Informative)
the cash equivalent to a much larger sum, $532 per month
The Wired.com article contains a footnote that says:
CORRECTION, Sept. 14, 2:55PM: Recipients in the study who got cash received $117 or $532. An earlier version of this article incorrectly said they received those amounts per month.
Yes, well... (Score:2)
The catch is: if you give out cash, you have to be willing to say "no", if the recipient comes back a day later, having blown the cash on something stupid.
Numerous other attempts have shown: a lot of people will take your cash, and blow it on stupid stuff. Then, they are screwed all over again, having blowing their month's food budget on lottery tickets, or cigarettes, or whatever.
At that point, you have three choices: either give them even more (stupid, stupid), or take away their control by restricting wh
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Hopefully, as long as the money stays in the local cigarettes/booze/hookers/blow economy, it's still there to circulate. Buy one iPhone, though ...
Don't generalize this to welfare (Score:5, Insightful)
Be careful applying the results of this study to the welfare situation in Europe and America. This money was a one-time payment to very poor nations with limited infrastructure. The temptation to oversimplify this into "just give welfare recipients cash instead of assistance programs" ignores the reality of the situation on the ground in these nations.
I used to believe that just giving people money directly was better. I assumed that welfare recipients were mostly people who got stuck in a rut, and just need help getting out, and they can make better decisions about how to spend their money than some big a government organization. Then, I met actually poor and homeless people, talked to the councilors who work with them, and realized how naive I was. The situation is much more complex than the politically-charged stories of someone whose job was replaced by automation. Those are great for putting politicians in office but not for helping people on the street.
There are lots of people who, given a sum of money, have no idea what to do with it. They don't have sufficient math skills to budget, or sufficient literacy to read and understand and pay their bills. A significant portion of welfare recipients have poor education, mental health problems, or drug addiction. As such they are "reactive" with money. They throw it at the thing that has the most short term benefit. So, for example, they might pay their electric bill, then by a new TV, then some drugs, then fall behind on their rent. To help with this, lots of these programs pay the bill directly, or take the form of discounts by paying the bills partially. That way, the person can't choose to spend the money on a TV since the check went straight to the landlord. Or if the rent appears to be so much cheaper, so they are more likely to pay it. Some people take checks to check cashing locations that take 10% off the top. If you live on the poverty level, a 10% hit like that id destructive! So instead the programs give them bank accounts or ATM cards or specialty welfare cards. In Europe and the US much of the welfare state is aimed at these individuals with mental health problems who really can't manage the cash on their own. Giving them cash is disastrous.
An example of this that doesn't involve mental health problems is with young NFL players. The NFL realized that when someone comes straight out of college and gets a multi-million dollar salary, they tend to spend it on hookers and blow. So the NFL began a program of training players how to save and invest. If that seems obvious, consider the humor of walking into the local tax office with a 1040EZ form that shows income of $1 million, showing that you owe the government 20% of that. That's a holy !@#$ wake-up moment that most people don't think about. Similar problems happen with child actors or young musicians.
It's good that we are doing these studies, but I see a lot of responses say "See, we knew all along that giving people cash was better." BUI FTW! But that isn't really what this study is showing us, and we have lots of experience that got us to the system we have today.
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I will agree with you on one thing, our mental-healthcare system is extremely underfunded. We need to do more, especially for the most vulnerable
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Read 'Utopia for Realists' (Score:2)
A number of researches have shown that it applies very well to welfare. It helps much more than other welfare systems (which have little benefit) and has much clearer results for reduced crime, increased education, helping people find work, etc.
I'm sure that it won't solve all cases, but it will solve a lot more cases then current welfare systems do, and will cost less.
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You are saying then education is the best solution.
Well that was one of three:
A significant portion of welfare recipients have poor education, mental health problems, or drug addiction.
And that's assuming poor education was because they never had the chance and not that they'd flunk it. There's a lot of people who're functional enough that you wouldn't want to put them in institutionalized care but who just aren't very bright or not stable enough to hold down a job. Some people really need their fixed costs subtracted and then a daily "allowance", they really do need to be treated more like teens than adults but not quite like toddlers. I know the plural of anec
You know what they say (Score:2)
You know what they say, it's better 1,000 kids starve then allow one person to misuse the money.
Fine for the recipients, but ... (Score:2)
Assumes Money is not Stolen (Score:2)
The reason we stopped giving money is because it was being confiscated by corrupt governments and used to fund terrorism of the local populations.
Giving food, etc, means the help is far more likely to go to the people.
The real issue is corrupt governments and we're not about to dispense of them. That's called "colonialism."
Without property rights and security, there is little good that can come with sending cash.
Here's an evil idea (Score:3)
Recipient must click to agree to tracking of those funds through the economy.
(See corruption in action, or not as the case may be)
Learn.
Optimize.
Repeat.
Profit?
Depends on who gets the cash (Score:2)
If you give the cash to the men, it tends to get spent on drink and parties, whereas if it goes to women with kids, it tends to get invested in small business and improving the family's health.
And stolen sometimes.
What was your end goal?
Rocketted, I say! (Score:2)
In an unrelated story, Apple announced their sales in Rawanda skyrocketted last year.
What will non-profit workers do? (Score:2)
By cutting out the middleman you will be putting tens of thousands of white NGO workers on the dole. Why would you want to do that?
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The tech is getting better and better, some would say exponentially, but we can just say, real fast, on a year by year basis.
People are getting better too, but on a 100,000 year by 100,000 year evolutionary basis.
You do the math.
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Personally? Maybe. Certainly sounds nice. But it should go away eventually. Because I don't want to keep paying the people who used to dig ditches when I want a backhoe to lay my fiber for me. I don't want to have to pay money towards a typists's pension fund every time I write a bash shell script to sendmail. I don't want the abacus union to take their cut whenever I use excel. Technology disrupts established institutions like... paying people to drive trucks. "Trucker" as a job title, will likely st
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This article is about people in 3rd world countries... only the wealthiest in those places would have access to video games.
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So when you have three jobs and are still one of the "poors", now what?
I eagerly await your insistence that this is not possible, despite it happening to millions of people.
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This is a development program. It's not going to people out of work from the auto industry, it's going to third world developing countries. Not enough food to go around, with more people than available jobs (all of which are in the city rather than rural villages).
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But the money has to come from somewhere. If a family in a village gets $500 per month and that comes from taxing me $500, then I have $500 less per month, and if my kids get sick I might no longer be able to afford their healthcare, or I may no longer be able to afford to send them to University. We do not yet live in a post-scarcity where machines produce everything for us; we still live in a society where to give to A we must take from B. These studies show benefits to the recipients of the welfare, that