12 Nov 2013 update
Listen to the follow up story citing research examining the impact, including discussions with Poverty Action Lab researchers and Chris Blattman.
This question comes up more and more often. The FII strategy was the first time I heard of the approach. A recent NPR story HERE examines an initiative called GiveDirectly in Kenya. As most of these stories go, people tend to spend money on things they really need, e.g., roofs. The approach has serious implications for social work/social services.
Methodological note. If you listen to the story you’ll here a clever interview strategy: the reporters, worried about a social desirability bias in the responses when asking people how they themselves spent money, began to ask people what their neighbors spent money on. Not surprisingly, the results were not as positive.