Psychology, Soft Skills, or Cash? Evidence on Marginal Investments

Megan Lang, Edward Soule and Catherine H. Tinsley

Economic Development and Cultural Change, 2024, vol. 73, issue 1, 423 - 450

Abstract: In the context of antipoverty programs, what are the benefits of marginal investments in interventions targeting soft skills or psychological well-being compared with direct economic assistance? We make progress on this question by benchmarking two programs against an unconditional cash transfer. One targets participants’ self-confidence and sense of agency using personal reflection and storytelling exercises. The other teaches soft skills: goal setting, public speaking, and networking. Relative to cash, the psychologically targeted intervention significantly improves psychosocial outcomes but not economic outcomes, while the soft skills program improves economic outcomes with few effects on psychosocial outcomes. However, when comparing the two interventions with one another, effects are statistically indistinguishable along most outcomes. Our results highlight the potential for targeted marginal investments in similarly designed interventions to improve specific outcomes.

Date: 2024
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