Livestock, cash support and training help the ultra-poor escape extreme poverty. A new research paper combining findings from studies on what is called the graduation model conducted in six countries found that the lives of the ultra-poor markedly improved because of the program. Not only that, gains remained in key areas like food security and household assets after three years and the program benefits outweighed the costs.
More than 21,000 people in Ethiopia, Ghana, Honduras, India, Pakistan and Peru participated in the two-year study. Households were randomly selected to take part in the graduation program. Participants in the program, implemented by the Consultative Group to Assist the Poor, were provided some sort of asset – such as livestock or goods needed to start a small business – and supported through weekly coaching visits and money or food to prevent the selling of the asset.
The average cost was as little as $330 per household in India and as much as $2,604 in Peru*. But the key is that positive returns were seen in five out of the six countries. In India, the average household garnered $4.33 in benefits for every dollar spent, according to the team of researchers from Innovations for Poverty Action and MIT’s Abdul Latif Jameel Poverty Action Lab.
“In terms of getting to long run changes at more deeply rooted problems we need to increase income,” said Yale University economist and one of the study’s lead authors Dean Karlan in an interview with Humanosphere. “Being ultra-poor usually means more than just not having an income – like not enough food to eat, no way to save, no information, and low perception of their opportunities to escape their situation.”
By pairing an opportunity to increase income with support to meet basic needs, the graduation program succeeds in providing an opportunity for the ultra-poor to permanently move out of extreme poverty. In addition to food support, the program also provided a savings account for emergency use and health assistance through education and improved access.
The findings validate a program pioneered by BRAC, a Bangladeshi nongovernmental organization founded to support the rural poor. Its graduation model is now implemented around the world by BRAC as well as groups like Heifer International, Trickle Up, and Fonkoze. Karlan is hopeful countries will look to do it themselves.
“We are already working with governments to show them these results,” he said. “We wanted what was best for the policy and the power here is in having all six all together. It is more powerful together than they would be in six separate papers.”
As with any study, questions remain. Karlan explained he is interested in learning whether there are unnecessary components. Household visits, for example, take up roughly 30 percent of the budget for the program. Doing them less frequently or not at all would cut costs significantly.
“I’m keen to see more work that walks us from ultra-poor programs to cash and see ways to mix these up and do it cheaper than it was done,” said Karlan.
And there are some other things worth considering about the study, said the World Bank’s Berk Ozler in a blog post reviewing the study. Ozler is generally optimistic about the design of the study and its findings, but has concerns about whether one year after the treatment ends is enough to determine long-term benefits. He also worries about the potential negative spillovers in communities where some people participate in the program and others do not.
“Governments would be well advised to study the findings, debate the details and the relevance to local contexts, and how such an approach may aid them in designing more effective social protection programs,” wrote Ozler. “Many governments have systems providing social safety nets to the poor, but programs that put the poor on a sustained growth path out of poverty are not yet in evidence.”
The study authors are confident that their findings provide ample evidence for policy makers as to how to effectively implement programs to support the ultra-poor.
“Governments, aid organizations and donors have been looking for something backed by real evidence showing it can help the poorest of the world, and this Graduation approach does exactly that,” said Annie Duflo, executive director for Innovations for Poverty Action.
“Part of the reason for doing this in six countries is to familiarize [policy makers] with the results and feel more confident,” said Karlan.
*Correction: An earlier version of the story used cost figures based on purchasing price parity. They have been amended to reflect the actual costs in India and Peru.