The new RCT results on poverty reduction
Declan Butler reports:
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 Science. “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.
Banerjee and Duflo are involved in the work as well, and this is sometimes called the “graduation model,” because the aim is to graduate people out of poverty. Note this:
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 while the model worked in many places, it failed in rural southern India and Honduras, in part due to…problems with chickens. Nonetheless this is big, big news. The link to the original research is here.
For pointers I thank Kevin Lewis and Michelle Dawson.