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Poor mental health is a pressing global health problem, with high prevalence among poor populations from low-income countries. Existing studies of conditional cash transfer (CCT) effects on mental health have found positive effects. However, there is a gap in the literature on population-wide effects of cash transfers on mental health and if and how these vary by the severity of mental illness. We use the Malawian Longitudinal Study of Family and Health containing 790 adult participants in the Malawi Incentive Programme, a year-long randomized controlled trial. We estimate average and distributional quantile treatment effects and we examine how these effects vary by gender, HIV status and usage of the cash transfer. We find that the cash transfer improves mental health on average by 0.1 of a standard deviation. The effect varies strongly along the mental health distribution, with a positive effect for individuals with worst mental health of about four times the size of the average effect. These improvements in mental health are associated with increases in consumption expenditures and expenditures related to economic productivity. Our results show that CCTs can improve adult mental health for the poor living in low-income countries, particularly those with the worst mental health.

The worse the better? Quantile treatment effects of a conditional cash transfer programme on mental health