The short-lived effects of unconditional cash transfers to refugees

Onur Altındağ and Stephen D. O’Connell

Journal of Development Economics, Volume 160 (2023), Article 102942


This paper examines the effect of two large-scale cash transfer programs on the welfare of Syrian refugee households in Lebanon. Lebanon hosts approximately 1.5 million Syrian refugees.

The authors quantify the effect of the multipurpose cash assistance program, which provides US$175 per month to eligible households, and the ‘‘food e-card’’, which provides a voucher for food items of US$27 per person per month. During the period of study, the cash program supported around 55,000 households per annum, while the food e-card program assisted over 120,000 households per annum. Households were means tested using proxy measures drawn from the Vulnerability Assessment of Syrian Refugees (VASyR) survey.

The authors exploit the discontinuity in eligibility across otherwise-comparable households to assess the impact of the assistance programs on household welfare. They draw on several data sources including: (i) predicted family expenditure per capita from VASyR, which determined eligibility for cash assistance; (ii) information on the type, amount, and duration of assistance a family received from the Refugee Assistance Information System (RAIS); and (iii) outcomes measured during the program cycle and after the program ended from VASyR.

Main findings:

  • Transfers comprised a large share of beneficiary families’ monthly expenditures and income and were allocated to essential consumption goods. Eligible families received on average US$144 per month from the food e-card program, equivalent to 33 percent of monthly expenditure, or 161 percent of monthly labor income. Families eligible for multipurpose cash received on average US$153 per month, equivalent to 35 percent of monthly expenditure, or 172 percent of monthly labor income. Families allocated additional income to essential consumption goods such as rent, food, and energy.
  • Programs provided temporary relief and improved economic wellbeing in the short term, generating higher household consumption, improved child welfare, increased food security, and reduced harmful coping strategies. The food e-card program increased food expenditure, improved food security, and reduced livelihood coping strategies. The multipurpose cash program had immediate positive effects on expenditure and child wellbeing and reduced adverse livelihood coping strategies. Overall, beneficiary families were less likely to borrow, reduce expenditure, downgrade their housing, or have children engaged in exploitative work.
  • The substantial increase in consumption during the program dissipated within six months of the end of the assistance cycle. Within six months following the conclusion of the program, families that received either of the year-long assistance packages appeared no different than otherwise similar non-beneficiary families.
  • Even though beneficiaries were better able to save and purchase durable goods during the program, they tended to spend savings and liquidate assets soon after the program ended. Receiving multipurpose cash increased the likelihood of having cash savings by 7 percentage points beyond the non-beneficiary rate of 31 percent. Beneficiaries were also 9 percentage points more likely to use savings to cope with insufficient liquidity during the same period. These results indicate an intention to save, but a lack of capacity to build an asset stock during the transfer period and maintain it afterwards.
  • Families reengaged in coping strategies after the programs ended. Following the conclusion of the programs, families increased begging and borrowing, child labor, buying food on credit, and selling household goods.
  • Program features do not explain the lack of sustained effects. In addition to the transfer values being larger than most unconditional cash transfer programs studied in the literature, the modality (cash versus food voucher) or duration (one versus two years) of the transfers did not affect the ability of beneficiaries to smooth consumption over a longer time horizon.
  • Beneficiaries exhibited forward-looking behavior. There wasn’t any evidence that beneficiaries increased consumption of “temptation goods” (entertainment, tobacco, or alcohol). Beneficiaries also removed children from work and reenrolled them in school and built up savings in the form of cash and durable goods.

The authors conclude that cash-based humanitarian aid programs effectively provide temporary relief but are unlikely to achieve longer-term poverty alleviation. Program features are unlikely to explain the lack of persistent effects. Rather, economic, and legal impediments faced by refugees constrain their ability to save and claim the returns on investments.