Cash transfer programs are increasingly recognized as effective tools for poverty reduction and improved well-being in developing nations. These programs directly provide monetary assistance to low-income families, aiming to improve their income and consumption of essential goods. The short-term benefits include meeting immediate needs, while long-term benefits can include investments in education and health, ultimately breaking the cycle of poverty. Cash transfers can also empower women and improve education and health outcomes, especially in patriarchal societies. Many developing countries, including Pakistan, have integrated cash transfer schemes into their social protection systems. However, evaluating their effectiveness and value for public expenditure is crucial. Pakistan faces significant challenges including widespread poverty, food insecurity, educational barriers, and limited access to resources for women. While poverty rates have decreased in recent decades, they remain substantial, particularly in rural areas. Conditional and unconditional cash transfer programs aim to enhance the socioeconomic welfare of vulnerable groups by promoting resilience, equity, and opportunities. The effectiveness of these programs depends on several factors including targeting, coverage, and the sufficiency of financial assistance. This study aims to construct a socioeconomic well-being index to evaluate the impact of unconditional cash transfers, specifically focusing on the Benazir Income Support Programme (BISP) in Pakistan, and to investigate how these transfers affect various aspects of well-being, considering household and individual characteristics.

Extensive research globally examines the impact of Social Safety Nets (SSNs) and Social Assistance (SA) programs on poverty reduction and well-being. Studies show an increasing commitment to these programs, but also highlight the persistent challenges of low coverage and insufficient benefits. Targeting strategies vary, from community-based approaches to Proxy Means Testing (PMT). Each method has its limitations, including potential for bias and difficulties in accurately identifying the poorest households. The Benazir Income Support Programme (BISP) in Pakistan, launched in 2008, is a flagship cash transfer program aimed at supporting vulnerable households. While initial targeting relied on parliamentarians, BISP later adopted PMT. Existing research on BISP reveals mixed results regarding its impact on poverty reduction, women's empowerment, and overall household well-being. Some studies indicate positive effects on food security, women's decision-making power, and school enrollment, while others show limited impact on poverty reduction and child nutrition. The existing literature lacks a comprehensive assessment of the overall impact of BISP on household well-being using a holistic index. This study aims to address this gap.

This study utilized three rounds of the BISP impact evaluation survey data collected in 2011, 2016, and 2019 by Oxford Policy Management. The data included 5265 households, with 1296 in the control group and 3969 in the treatment group (BISP beneficiaries). A socioeconomic status (SES) index was constructed using Principal Component Analysis (PCA) to combine 15 indicators across four domains: material resources, living standards, financial hardship, and women's empowerment/mobility. The PCA used the correlation matrix technique to account for different measurement units of variables. A quasi-experimental design using a Difference-in-Differences (DID) approach was employed to analyze the impact of unconditional cash transfers on the SES index. The DID model controlled for household size, employment status, and household remittances. The assumptions of the DID model were considered, including the parallel trends assumption and the absence of spillover effects. The mathematical model employed is a regression model that incorporates time, intervention, an interaction term, covariates, and an error term. The study acknowledges potential limitations inherent to quasi-experimental designs.

The PCA generated a socioeconomic score (SES) reflecting household well-being. Between 2011 and 2016, the SES decreased for both treatment and control groups, but the decline was less in the treatment group, although the difference was not statistically significant. From 2016 to 2019, there was a marginal, insignificant positive increase in SES. Overall, the SES declined from 2011 to 2019 for both groups. Regional analysis showed similar trends, with rural households experiencing a larger decline than urban households during the 2011-2016 period, reversed from 2016 to 2019. Analysis by quintile revealed that higher quintiles experienced smaller reductions in well-being than lower quintiles. Domain-wise analysis showed that the access to material resources and living standards improved from 2011 to 2016, and then declined by 2019 for both groups, though less so in the treatment group. Financial hardship decreased for both groups from 2011 to 2019, with BISP beneficiaries showing a slightly less decrease in hardship. Women's empowerment/mobility increased for beneficiaries from 2011 to 2019, while non-beneficiaries saw a reduction in this domain. Difference-in-differences (DID) analysis showed that the unconditional cash transfers had a limited and statistically insignificant impact on SES between 2011-2016, 2016-2019 and 2011-2019. Employment and household remittances positively influenced SES.

The study's findings suggest that the BISP unconditional cash transfer program had a limited impact on improving household socioeconomic well-being in Pakistan, despite its considerable investment. The lack of substantial positive impact can be attributed to several factors including the impact of inflation, which reduced the real value of transfers, inconsistent payment frequencies, insufficient funding, and the overall economic context. These findings resonate with similar studies in other countries where cash transfer programs have yielded mixed results. The analysis highlighted the significant influence of factors like employment and household remittances on SES. These findings underscore the complexity of poverty reduction and the need for multifaceted approaches that address economic opportunities and income sources. The limitations of relying on a quasi-experimental design were acknowledged, and the study indicates future research opportunities that might improve causal inference.

This study used a comprehensive SES index and a rigorous quasi-experimental design to assess the impact of unconditional cash transfers in Pakistan. The findings highlight the limited impact of BISP on overall household well-being, suggesting a need for a reevaluation of the program's design and funding. Future research should explore alternative strategies that promote income generation, asset creation, and climate-resilient livelihoods. Further investigation into the impact of program characteristics (like payment frequency and amount) is needed. A comprehensive policy focusing on inclusive growth, promoting equal opportunities, and mitigating the impacts of economic shocks and climate change is recommended.

The study utilized a quasi-experimental design, which has inherent limitations compared to randomized controlled trials. The parallel trends assumption of DID was tested, but potential unobserved confounding factors could not be fully ruled out. The study's reliance on self-reported data could introduce some bias. The available data did not extend beyond 2019, limiting the assessment of long-term impacts. The study acknowledges that other factors, like the broader economic climate, influence SES, and these were not fully captured.