The impact of unconditional cash transfers on enhancing household wellbeing in Pakistan: evidence from a quasi-experimental design

Abstract

Abstract Cash transfer programs have emerged as potent tools for alleviating poverty and enhancing the living conditions of the most deprived households in developing nations. Such initiatives have now become integral components of social protection systems in many developing countries, including Pakistan. Evaluating the efficacy of these safety nets is crucial to comprehend their value in terms of public expenditure. This research employed a well-being index to gauge the impact of unconditional cash transfers on the socioeconomics of recipients. By employing three rounds of the BISP impact assessment survey conducted in 2011, 2016, and 2019. The study measured the overall impact of cash transfers on well-being by utilizing Principal Component Analysis in conjunction with a Difference-in-Differences Quasi-Experimental design over the years. The findings of the study indicate that between 2011 and 2016, the socioeconomic status declined for both treatment and control groups, but the reduction was less pronounced among those who received treatment compared to the control group with insignificant. From 2016 to 2019, there was a marginal positive increase in socioeconomic status, although it was of insignificance. Overall, the well-being of both the control and treatment groups decreased from 2011 to 2019, with a slightly more pronounced improvement observed in the treatment group. This trend suggests that the impact of the BISP unconditional cash transfer program had a limited effect on altering the well-being of the beneficiaries. The lack of substantial impact from the BISP’s cash transfers on household well-being can be attributed to factors such as inflation, unemployment, economic slowdown, payment challenges, insufficient funding, and gaps between installments. The government of Pakistan should reconsider the substantial investment in BISP within the context of value for money. It is advisable for the government and policymakers to channel this substantial investment into income generation, capital asset development, microbusinesses, climate-resilient agriculture, and livestock in order to stimulate the real economy sectors.