#JCHAT: On Social Protection — Through the Evidence with Sana Satpathy, Sector Lead for South Asia

We often hear about Social Protection programs—in the news and otherwise too. What do these programs essentially do?

SS: Social Protection programs are designed with an aim to alleviate poverty, promote dignity, and safeguard vulnerable populations—such as children, the elderly, minorities, and individuals with disabilities—from economic instability and social exclusion. By providing financial assistance and insurance against income and expenditure shocks throughout the life cycle, these programs address persistent vulnerability and avert the risk of falling into the poverty trap.?

They also play a pivotal role in breaking the cycle of intergenerational poverty , enabling people to invest and engage in new economic activities to escape poverty traps. Additionally, Social Protection programs reduce inequality by helping vulnerable groups improve their standards of living. They also stimulate markets and consumer demand by facilitating better employment and providing additional income to spend in local markets.??

These programs take various forms, including direct cash or in-kind support, public work schemes, social insurance, social security benefits like pensions, maternity and disability benefits, and housing support.?

Why is the sector an important area of inquiry for researchers??

SS: Research on Social Protection is crucial as it ensures that these programs and policies are carefully designed to meet the diverse needs of people across different demographic contexts. As low-and middle-income countries, like ours, expand their Social Protection programs, it's essential to generate rigorous empirical evidence on less-explored areas and questions within various settings. This approach is key to fully grasping the potential impacts, long-term outcomes, and unique challenges of these policies in different contexts.

Do you think a multifaceted approach is necessary when we think about Social Protection?

When we think about improving economic and social outcomes in the longer term, it's important to consider that poverty isn't a one-dimensional issue; it's layered and complex. Hence, our approach needs to be multifaceted. By incorporating a range of complementary interventions, such as cash and productive asset transfers, skills training,? health initiatives, etc., large and positive effects on economic well-being can be achieved over a longer term.

This approach addresses diverse constraints experienced by individuals living in poverty. In India, a multi-faceted livelihoods program known as the Graduation approach aims at encouraging occupational change among people living in extreme poverty. The results are quite striking: with initial increases in income from asset transfers, families have been able to invest in businesses and seek employment, both locally and further afield, with lasting benefits on their consumption and health observed even a decade later.

What are some common misconceptions about cash transfers?

SS. I often hear concerns that cash grants may lead people to spend on things they don't really need, like tobacco or alcohol, which are essentially temptation goods. But a review of 19 cash transfer programs across various low- and middle-income countries reveals that these initiatives have not encouraged spending on temptation goods, and in some cases, they have even led to a reduction in temptation spending.

There’s also this misconception that receiving cash is likely to discourage people from working due to increased income security. J-PAL affiliated researchers analyzed data from seven randomized evaluations of government cash transfer programs in six low- and middle-income countries, and found that there's no significant evidence to suggest that cash transfers are affecting labor supply or discouraging work.?

Why do you think social insurance is critical in low- and middle-income countries?

SS: Social insurance becomes really important in countries where people might not have easy access to private insurance. Plus, even when there's affordable insurance out there, not many people go for it. It's a tricky situation because it can leave a lot of people exposed to financial shocks, especially if they lose their job or have unexpected expenses. Further, studies highlight that even when insurance is available at fair prices, its demand can be quite limited in low- and middle-income countries, leaving people vulnerable to many risks.

How do we know who the vulnerable are? How are the beneficiaries of the Social Protection programs identified??

SS: That’s precisely why the targeting of Social Protection programs is as crucial as their design in achieving their intended impact. In high-income countries, governments often employ means-testing to identify beneficiaries, ensuring eligibility for those with incomes below a certain threshold.

However, in many lower-income countries, traditional means-testing isn't feasible because a significant portion of the population works in the informal sector and lacks verifiable income records. In this context, it's imperative to evaluate alternative targeting methods, including proxy-means testing, community-based targeting, and self-selection.

Our findings suggest that while proxy-means testing —which relies on observable indicators such as expenditure, assets and education—offers greater accuracy in identifying beneficiaries, community-based targeting can enhance satisfaction by more accurately identifying households that consider themselves poor.?

It is also important to be mindful of how these programs are delivered.?In some contexts , digital transfers have emerged as a potent tool in reducing corruption and cutting down transaction costs. Interestingly, directing cash transfers to women within the beneficiary households brings additional benefits, amplifying their decision-making power and reducing instances of physical and sexual violence .

Based on your experience, what key challenges do low- and middle-income countries encounter in implementing Social Protection programs?

SS: When implementing Social Protection programs in low- and middle-income countries, we're up against some specific hurdles. For starters, our fiscal space is tight due to relatively lower tax-to-GDP ratios and borrowing limits, which can complicate funding for such initiatives. Further, the informal nature of the economy and limited information on income can create challenges in targeting. That's why, diving into research to understand what really works is the call of the hour.

What has personally strengthened your commitment to the sector and efforts to forge research partnerships?

SS: The Covid-19 crisis has underscored the essential role of Social Protection in preventing the poor and vulnerable from being overlooked during major economic downturns such as recessions or commodity fluctuations, and personal emergencies such as the loss or incapacitation of a primary breadwinner, or unemployment.

Reflecting on questions related to poverty reduction in the post-pandemic world has reinforced my interest in the sector and solidified my commitment to engaging with governments and civil society organizations to forge new research partnerships, disseminate insights from global evidence, and catalyze evidence use within the sector.

To connect and explore knowledge-sharing and partnership opportunities in Social Protection, you can write to [email protected] and [email protected] ?