If you give poor people money to spend on positional goods, the market will eventually respond, but it doesn’t respond instantly. They may actually be able to be able to purchase the positional goods in the time it takes for the market to respond. Furthermore, if you give the money to only a relatively small number of poor people, the effect of your money may not be enough for the market to respond much.
Now, apparently what’s actually happening is that some poor people are spending the money they get from cash transfers on school fees but (I guess) most aren’t. What then? Staying in Econ-101-land, what this indicates is that different people have different values and the poor people who get most utility from having educated kids will do that.
But you’re interested in making the donations effective. If only a small portion of the recipients will spend them in utility-increasing ways, you have to discount the effectiveness accordingly.
If you give poor people money to spend on positional goods, the market will eventually respond, but it doesn’t respond instantly. They may actually be able to be able to purchase the positional goods in the time it takes for the market to respond. Furthermore, if you give the money to only a relatively small number of poor people, the effect of your money may not be enough for the market to respond much.
But you’re interested in making the donations effective. If only a small portion of the recipients will spend them in utility-increasing ways, you have to discount the effectiveness accordingly.