http://www.nature.com/news/aid-burst-lifts-people-out-of-extreme-poverty-1.17560
Aid burst lifts people out of extreme poverty
Huge experiment across six nations shows lasting benefits from
short-term support.
Declan Butler
15 May 2015
Abhijit Banerjee and Esther Duflo (pictured in India, 2007) helped to
organize the randomized controlled trial that showed how aid
interventions could help people escape extreme poverty. Both are
directors of MIT's Abdul Latif Jameel Poverty Action Lab.
Giving some of the world’s poorest people a two-year aid package —
including cash, food, health-care services, skills training and advice
— improves their livelihoods for at least a year after the support is
cut off, according to the results of an experiment involving more than
10,000 households in six countries.
The poverty intervention had already been trialled successfully in
Bangladesh, and the study's researchers say it shows the approach
works in other cultures too. "We finally have truly credible evidence
that a programme for the poorest of the poor can really help them
meaningfully reduce their poverty," says Dean Karlan, an economist at
Yale University in New Haven, Connecticut, and a co-author of the
study, reported today in Science1. “Until now, we haven’t really been
able to go to a government outside Bangladesh and say, we’re confident
this works."
Ethiopia, one of the countries that was in the trial, is planning to
continue and scale up the intervention to cover around 3 million
people, says Karlan, and Pakistan and India are considering scaling up
interventions, too.
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Outside experts are more cautious, but still impressed, particularly
because the work was done as a randomized control trial — in which
people were randomly assigned to either an intervention or a control
group. Most poverty interventions have failed to show sustainable
benefits in such trials, so the effectiveness of the programme
justifies countries considering the strategy, says Jonathan Morduch of
New York University, who studies microfinance and poverty. He cautions
that pilot studies tend to work better than scaled-up versions because
they receive much more attention and oversight.
Aid on trial
The idea of assessing poverty inventions in randomized control trials,
in the same way as drugs and vaccines are tested, was developed over
the past decade by the Abdul Latif Jameel Poverty Action Lab (J-PAL),
at the Massachusetts Institute of Technology in Cambridge (see
'International aid projects come under the microscope’), and by
Innovations for Poverty Action, a non-profit organization founded by
Karlan that coordinated the latest study.
The particular programme tested in the study is known as the
graduation model, because it is intended to ‘graduate’ people out of
extreme poverty. It was invented in Dhaka by the Bangladesh Rural
Advancement Committee (BRAC), one of the world's largest
non-governmental development organizations. More than 1 billion people
in the world live on less than US$1.25 per day, but the graduation
model targets the hundreds of millions who live on less than 70 cents
per day. These are mostly rural women and slum dwellers who are often
dependent on aid to survive.
By 2011, BRAC had already reached some 400,000 households in
Bangladesh, and its programme has been proven highly effective in a
randomized trial. In the latest programme, designed to see whether the
intervention would work elsewhere, households were given assets such
as goats, sheep or chickens to start farming, or the means to open a
shop, and then supported with food, cash, a savings account, and
access to health care while they were getting their activity up and
running. Coaches visited them regularly over a two-year period to
offer advice — such as how to manage money — and to keep them on
track.
Overall, one year after the intervention stopped, the experiment
produced a 14% increase in assets and a 96% increase in savings,
compared with similar groups of people not enrolled in the program,
the paper says. "Effects often fade over time, so seeing results
persist for a year is already quite impressive," says Morduch. It
shows that a coordinated short-term intervention can put very poor
people on the first rung of the ladder of escape from extreme poverty.
But although the intervention was successful in Ethiopia, Ghana,
India, Pakistan and Peru, it failed in Honduras. There, poor
households were mostly given imported chickens, many of which caught
local diseases and died.
No panacea
The intervention is not cheap. Costs per household ranged from $1,455
in India to $5,962 in Pakistan, although they were offset by positive
returns on investment ranging from 133% in Ghana to 433% in India. The
researchers hope to cut costs in future by scaling back the
experiment's more expensive components, such as training.
And although the intervention worked in diverse cultures outside
Bangladesh, it also will probably not work everywhere. A randomized
trial of the graduation model in rural southern India that Morduch and
colleagues published in March2 failed to show any benefits. Residents
there turned out not to be keen to become farmers, Morduch says, and
most ended up selling the livestock that they were given to take up
paid labour.
The graduation model is not a panacea. Historically, the biggest
reductions in extreme poverty have resulted from economic growth,
notes Karlan. The percentage of those living on less than $1.25 a day
in developing countries fell from 43% in 1990 to 17% in 2011, driven
largely by economic growth in China and India. But trickle-down
economic improvements will not end extreme poverty any time soon, he
says, so there is still a role for bottom-up interventions.
Received on Sun May 17 2015 - 12:10:23 EDT