New data reveals which approach to helping the poor actually works

June 17, 2015
For release with feature ETHIOPIA-FAMINE.

An Ethiopian man examines his crop near Korom in northern Tigray province, November 25, 2004. REUTERS/Radu Sigheti

For years, policymakers have debated different approaches to helping the poor — everything from building schools, to delivering soccer balls that produce electricity. But new data, published in May after a nine-year, six-country study, offers resounding evidence for a strategy that works.

A group of my economist colleagues and I, together with the research and policy non-profit Innovations for Poverty Action, and MIT’s J-PAL, tested an approach known as a “Graduation” program. The program is designed to boost the livelihoods of the “ultra-poor” — the 1 billion people worldwide who live on less than $1.25 per day.

We tested these programs using a randomized controlled trial: a scientific methodology more typically associated with healthcare research, and considered the gold standard for impact evaluation. Workers offer a new policy or program to a group, and over the same period track it and a comparison group that continues on as normal. This comparison is key because changes in the outside environment — such as a dry season for crops, or disease outbreak — can create massive swings in fortune for the world’s poor. By comparing two groups that both experience the environmental changes, but only one of which receives the program, we can learn how much change is from the program.

Through these kinds of rigorous evaluations, we often find that programs thought to work don’t — or don’t work as expected. For example, we’ve discovered that microloans — one of the most visible tools for helping the poor, and bolstered by a Nobel Peace Prize — are helpful, yet largely ineffective at lifting people out of poverty.

In education, we’ve learned that while some organizations in poor countries give out free uniforms and others scholarships, in Kenya a simple anti-parasite pill that kept children healthy enough to learn was 20 times as cost-effective as the uniforms, and 51 times as cost-effective as scholarships. Our local teams tracked the children into adulthood, and found that the children who received the anti-parasite pills went on to earn over 20 percent higher wages as adults than their peers who didn’t. In India and sub-Saharan Africa, where governments are implementing these programs, over 95 million children have now received the pills.

Yet poverty, and especially extreme poverty, is difficult to eliminate. The poorest of the poor have more problems than just lacking a regular income. Because they usually experience multiple challenges at the same time, we decided to look at the Graduation approach. Organizations employing this approach had been offering participants a “productive asset” (an asset that generates income, such as livestock or supplies to sell in a small store), training on how to use it, healthcare to keep them healthy enough to work, a small amount of food or money to support themselves while they learned to make a living (so they didn’t have to sell the asset immediately, merely to eat), access to a savings account to build up a buffer for future emergencies, and weekly coaching in areas like overcoming unexpected obstacles and meeting their savings goals.

Starting in 2006, we studied Graduation programs in six countries to determine if an approach this complex could actually work. We tracked more than 21,000 adults in 10,495 households in India, Pakistan, Ethiopia, Ghana, Peru and Honduras. Across all three continents we saw increases in mental and physical health, income, assets, and reductions in hunger — not just at the end of the program, but when we revisited the participants a year later.

When the program worked, it returned 133 percent to 433 percent on investment, depending on the country. So for every dollar invested in India, participants spend and eat $4.33 more — a great deal from the government’s perspective. The program is being scaled up in Ethiopia as part of the country’s national social safety net program, and to a smaller extent in India and Pakistan as well.

Like practitioners in other fields, we have used the power of good data to take the guesswork out of what strategies work — in our case, efforts to alleviate poverty. Rather than spending critical resources on programs and policies that aren’t effective, governments and aid organizations can instead invest in a program that will foster self-sufficiency among the world’s poorest people.

Ideas should be funded based on evidence that they work — not hope.





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It would be nice to have an anti-parasite pill for the greedy, wealthy plutocrats who do not care whether or not the poor to stay that way and who appear to be running much of the world.
I would presume that there are children of many of them in your ivory tower, ivy league institution. You would do well to try to instill in them a deep sense of community and commitment to the betterment of the planet rather than their own parent’s stockpile of wealth.

Posted by lotuslandjoe | Report as abusive

As I always suspected ! In Bangladesh the evidence are enormous, preaching microcredit and abusing the misfortunes of the poor, Grameen bank made enormous wealth while poors remain worse off with a massive burden of interests!

Posted by cltaltdel | Report as abusive

Poverty follows religion, around the world. People who believe strongly in an afterlife are content to be poor here on earth. This has worked for centuries. When you look at Alabama, Arkansas, Haiti, Sao Palo Brazil, Pakistan, the slums of Mumbai….. what they all have in common is strong religious faith. And they are all broke. Miserably poor and dirty.

Meanwhile, look at Norway, Silicon Valley, Manhattan, Germany, Australia…. rich places. What do they have in common? Indifference to religion and faith.

“Religion is what keeps the poor from murdering the rich.” -Napoleon Bonaparte

Posted by Solidar | Report as abusive

I am not sure how much money they spent on this study… But Give a man a fish feed him for a day. Teach a man to fish feed him for a life-time. It is good they are working toward self-reliance.

Posted by lgsbharv | Report as abusive

You mean that a person willing to better their life that’s given the tools necessary to do so improves their economic condition? No kidding? Anyone who lives in the REAL world with their minds unclouded by class warfare rhetoric and unaccepting of the guilt the progressives attempt to foist on them for their wealth understands this. Handouts of money, do nothing to effect change.

Posted by beofaction | Report as abusive

Let me add about religion and poverty.
Poor people are poor not because of religion but due to the environment they are put in.It is their faith in so called God,enable them to bear poverty.God may be imaginary concept but that make mankind to survive hardship.Even a surgeon after surgery prays God for success.
It is my life long observation that man’s faith is according to the environment they are put.(My own personal example.My elder daughter had two school going kids.One of her kids was approved for admission in a private school but she could not afford.I told her to go away from us parents and live in educated and rich area.I bought her a house there.In just five years her kids shined out and she prospered with her own business)

Posted by gentalman | Report as abusive

gentalman explains: “One of her kids was approved for admission in a private school but she could not afford.”

Bet it was in a non-religious area. And the poor area she started in was religious. Maybe muslim or…. Catholic Latin America? Poverty follows religion. Poverty is largely caused by religion.

Posted by Solidar | Report as abusive