Aid Burst Lifts People Out of Extreme Poverty

Monday, May 18, 2015

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.

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.

Source: Nature (link opens in a new window)

graduation approach, poverty alleviation