(Illustration by Ben Wiseman)
The elimination of extreme poverty by 2030 has emerged as a leading goal among international development groups. So far, unfortunately, identifying solutions that will provide sustainable help to the very poor has proved to be an elusive quest. But one group of scholars believe that they have found a way to meet that challenge: rigorous testing of programs to see which ones truly work. “Starting about 15 years ago, we saw a lot of frustration in this space. There wasn’t any good evidence,” says Dean Karlan, professor of economics at Yale University. “We saw a huge shift toward experimental work.”
Recently, Karlan and several other researchers—including two prominent scholars from the Abdul Latif Jameel Poverty Action Lab at MIT, Abhijit Banerjee and Esther Duflo—set out to test what they call “a multifaceted approach” to reducing poverty. “We thought, ‘Let’s throw everything we have [at the problem] and push at a household level,’” Karlan says.
The researchers conducted a two-year program that targeted the poorest residents of villages in Ethiopia, Ghana, Honduras, India, Pakistan, and Peru. Modeled after an initiative first implemented by BRAC, a large NGO based in Bangladesh, the program provided a broad set of goods and services: assets (such as livestock) that would enable participants to start their own business, training in technical skills, cash and food support, health care support, access to a savings account, and frequent home visits. In those visits, staff members from local NGOs offered training in health, nutrition, and hygiene, along with coaching on how to manage the participants’ finances. The research team used a randomized controlled trial (RCT) to test for sustained increases in income and for stable improvements in other aspects of well-being, such as physical health, mental health, food security, and women’s empowerment.
The RCT produced encouraging results. Most participants in the program—in comparison with fellow villagers who didn’t take part in it—experienced an increase in consumption, savings, asset ownership, and food security. These economic benefits, moreover, persisted three years after the start of the program (that is, one year after its conclusion). This study, in short, “shows that we are really not that far away from dramatically reducing extreme world poverty,” says Michael Kremer, the Gates Professor of Developing Societies in the Department of Economics at Harvard University.
The program had certain limitations. For one thing, it was expensive: the cost per household ranged from $1,455 to $5,962. In addition, improvements associated with physical health and women’s empowerment did not persist at the end of the program. The researchers also found no evidence of spillover benefits among others who live in the same village as participants.
“The right [question] is whether the benefits are greater than the costs,” Karlan says. “And we found that [they were]. So now the question is if we can get the same benefits with lower costs.” In a study that’s now under way in Ghana, he and his colleagues are testing whether home visits (which involve a costly investment in labor) are necessary to generate positive results. Kremer suggests that the researchers should also investigate whether the benefits of the program last longer than three years.
Karlan and Kremer both note that the next step for poverty researchers is to compare the impact of this multifaceted approach with that of another approach that has recently gained prominence—cash transfer programs. “The results from giving cash directly, conditional cash transfers, and this approach all suggest quite positive results,” Kremer says. “If you combine [those results] with economic growth in China, India, and Africa, it’s very encouraging. We’re not going to eliminate extreme poverty by 2030. But we can get most of the way there with the tools that we have available.”
Abhijit Banerjee, Esther Duflo, Nathanael Goldberg, Dean Karlan, Robert Osei, William Parienté, Jeremy Shapiro, Bram Thuysbaert, and Christopher Udry, “A Multifaceted Program Causes Lasting Progress for the Very Poor: Evidence From Six Countries,” Science, 348, May 2015.
Read more stories by Kristine Wong.