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Graduation programme recognises multiple challenges facing poorest of the poor and offers integrated, practical approach at every level, writes Dean Karlan

June 25, 2015

FOR years, policy makers have debated different approaches to helping the poor — from building schools to delivering soccer balls that produce electricity. But new data, published last month after a nine-year, six-country study, offers resounding evidence for a strategy that works.

A group of my economist colleagues and I, together with the research and policy non-profit Innovations for Poverty Action and MIT’s J-PAL, tested an approach known as the Graduation programme. It is designed to boost the livelihoods of the “ultra-poor” — the 1-billion people worldwide who live on less than $1.25 a day.

We tested this programme using a randomised controlled trial: a scientific methodology more typically associated with healthcare research and considered the gold standard for impact evaluation.

Workers offer a new policy or programme to a group, and over the same period, track it with a comparison group that continues as normal. This comparison is key because changes in the outside environment — such as a dry season for crops or a disease outbreak — can create huge swings in fortune for the world’s poor.

We often find that programmes thought to work do not — or do not work as expected. For example, we have discovered that microloans — one of the most visible tools for helping the poor, and bolstered by a Nobel Peace Prize — are helpful, yet largely ineffective for lifting people out of poverty.

In education, we have learned that while some organisations in poor countries donate free uniforms and others scholarships, in Kenya a simple antiparasite pill that kept children healthy enough to learn was 20 times as cost-effective as the uniforms and 51 times as cost-effective as scholarships.

Our local teams tracked the children into adulthood and found that those who received the antiparasite pills went on to earn more than 20% higher wages as adults than their peers who did not.

Yet poverty, and especially extreme poverty, is difficult to eliminate. The poorest of the poor have many problems over and above lacking a regular income. This is because they usually experience multiple challenges at the same time. So we decided on the Graduation approach.

Organisations employing this approach offered participants a “productive asset” (an asset that generates income, such as livestock or supplies to sell in a small store), training on how to use it, healthcare, a small amount of food or money, access to a savings account to build up a buffer for emergencies, and coaching in areas such as overcoming unexpected obstacles and meeting savings goals.

Starting in 2006, we studied Graduation programmes in six countries to determine if an approach this complex could actually work. We tracked more than 21,000 adults in 10,495 households in India, Pakistan, Ethiopia, Ghana, Peru and Honduras.

Across all three continents, we saw increases in mental and physical health, income, assets and reductions in hunger — not just at the end of the programme, but also when we revisited the participants a year later.

When the programme worked, it returned 133% to 433% on investment, depending on the country.

Rather than spending critical resources on programmes and policies that are not effective, governments and aid organisations can instead invest in a programme that will foster self-sufficiency among the poor.

• Karlan is professor of Economics at Yale University and president and founder of Innovations for Poverty Action

Source: Business Day

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