Can Digital Aid Deliver During Humanitarian Crises?

Author:

Michael Callen, Miguel Fajardo-Steinhäuser, Michael G. Findley, Tarek Ghani

Keyword:

Economics, General Economics, General Economics (econ.GN)

journal:

date:

2023-12-20 00:00:00

Abstract

Global hunger levels have set new records in each of the last three years, outpacing aid budgets (WFP, 2023; FSIN, 2023). Most households experiencing food insecurity crises are now in fragile states (Townsend et al., 2021), making it difficult to support vulnerable, hard-to-reach populations without interference from oppressive governments and non-state actors (Kurtzer, 2019; Cliffe et al., 2023). Despite growing interest in using digital payments for crisis response (Suri and Jack, 2016; Pazarbasioglu et al., 2020; Aiken et al., 2022), there is limited causal evidence on their efficacy (Gentilini, 2022; WFP, 2023). We show that digital payments can address basic needs during a humanitarian crisis. We conducted a randomized evaluation among very poor, mostly tech-illiterate, female-headed households in Afghanistan with digital transfers of $45 every two weeks for two months. Digital aid led to significant improvements in nutrition and in mental well-being. We find high usage rates, no evidence of diversion by the Taliban despite rigorous checks, and that 80% of recipients would prefer digital aid rather than pay a 2.5% fee to receive aid in cash. Conservative assumptions put the cost of delivery under 7 cents per dollar, which is 10 cents per dollar less than the World Food Program's global figure for cash-based humanitarian assistance. These savings could help reduce hunger without additional resources. Asked to predict our findings, policymakers and experts underestimated beneficiaries' ability to use digital transfers and overestimated the likelihood of diversion and the costs of delivery. Such misperceptions might impede the adoption of new technologies during crises. These results highlight the potential for digital aid to complement existing approaches in supporting vulnerable populations during crises.

PDF: Can Digital Aid Deliver During Humanitarian Crises?.pdf