Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1377: The Comparative Impact of Cash Transfers and a Psychotherapy Program on Psychological and Economic Well-being

Johannes Haushofer (), Robert Mudida and Jeremy Shapiro
Additional contact information
Johannes Haushofer: Department of Economics, Stockholm University and, Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Robert Mudida: Strathmore Business School
Jeremy Shapiro: Busara Center for Behavioral Economics

Abstract: We study the economic and psychological effects of a USD 1076 PPP unconditional cash transfer, a five-week psychotherapy program, and the combination of both interventions among 5,756 individuals in rural Kenya. One year after the interventions, cash transfer recipients had higher consumption, asset holdings, and revenue, as well as higher levels of psychological well-being than control households. In contrast, the psychotherapy program had no measurable effects on either psychological or economic outcomes, both for individuals with poor mental health at baseline and others. The effects of the combined treatment are similar to those of the cash transfer alone.

Keywords: Unconditional cash transfers; Psychotherapy; Randomized experiment

JEL-codes: C93; D90; O12

89 pages, January 7, 2021

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