Cash transfer and a psychological intervention: Impact on alcohol outcomes and household welfare in India

Abstract

This study uses a randomised controlled trial (RCT) to examine the short-term effects of an alcohol remission program in rural Punjab, India. Participants were assigned to one of four experimental groups: (i) daily vouchers for 30 days, (ii) five psychological counselling sessions, (iii) a combination of both, or (iv) a control group. We evaluated the impact of these treatments on alcohol consumption, household welfare, and psychological well-being. Results indicate that psychological counselling significantly reduced alcohol consumption and improved psychological well-being and household welfare. However, when combined with unconditional cash transfers, the effectiveness of psychological counselling diminished, resulting in a null effect on alcohol consumption. This paradox suggests that while psychological interventions foster self-regulation and behavioural change, introducing cash transfers may weaken intrinsic motivation or enable unintended spending patterns.