A proven approach to helping the ultra-poor

Peruvian womanAnti-poverty research led by a Yale University economist may have cracked the data code for helping the world’s poorest citizens.

Gathering data from six countries, the researchers tested a comprehensive approach for helping ultra-poor citizens — those 1 billion people around the world living on less than $1.25 a day — increase their income and improve their health. The approach is known as the “Graduation model.” The study followed 21,000 of the world’s poorest people for three years.

The study appears May 14 in the journal Science.

“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,” said Yale economist Dean Karlan, co-author of the study and founder of the New Haven-based non-profit Innovations for Poverty Action. “We tested an approach that addressed several factors at once, and found significant improvements, even three years after the program did the bulk of the work.”

The findings suggest that the approach works across a range of cultural, political, and economic variables that have been stumbling blocks in the past to combating poverty. The researchers tracked people in Ethiopia, Ghana, Honduras, India, Pakistan, and Peru. The program included six components over a two-year period:

  • An asset to use to make a living, such as livestock or goods to start an informal store
  • Training on how to manage the asset
  • Basic food or cash support to reduce the need to sell their new asset in an emergency
  • Frequent (usually weekly) coaching visits to reinforce skills, build confidence, and help participants handle any challenges
  • Health education or access to health care to stay healthy and able to work
  • A savings account to help put away money to invest or use in a future emergency

The researchers used a randomized, controlled trial that tracked people invited to participate in the two-year program, as well as people in another group who did not participate. The researchers compared the two groups to see how their lives changed up to a year after the program ended. Those in the program group had significantly more assets and savings, spent more time working, went hungry on fewer days, and experienced lower levels of stress and improved physical health.

The program saw positive returns in five of six countries, ranging from 133% in Ghana to 433% in India. For every dollar spent on the program in India, ultra-poor households saw $4.33 in long-term benefits.

The government of Ethiopia plans to expand the program to benefit 3 million people through the country’s Productive Safety Net Program, and the program already is being scaled up in Pakistan and India.

“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 of Innovations for Poverty Action.