Cash, Conditions, and Child Development: Experimental Evidence from a Cash Transfer Program in Honduras

We explore the effects of a randomly assigned conditional cash transfer in Honduras (Bono 10,000) on early childhood development. We find significant impacts on cognitive development in children aged zero to sixty months, with an average effect of 0.13 standard deviations. We show differential impacts by type of transfer: zero- to five-year-old children from families receiving the health transfer, which targeted families with zero- to five-year-old children only, benefited significantly from the program, whereas zero- to five-year-olds in families receiving the education transfer, which targeted six- to eighteen-year-olds, perceived no benefit. In comparison with other programs, the effect of this impact is sizable (0.34 standard deviations, on average). Although the overall program appears to have slightly changed some behaviors that might affect children (namely, decreased probability of maternal employment and increased maternal self- esteem), we did not find heterogeneous impacts of the Bono across these variables. Results are explained mainly by differences in conditions: while the education component imposed conditions only on children of school age, the health transfer required regular health checkups of zero- to five-year-old children. The health transfer families were more likely to attend health checkups, which may have induced behavioral changes that improved children’s health and cognitive development, including purchasing more nutritious food. These results imply that cash without well-targeted conditions might not be as effective for the development of young children.