Bram Thuysbaert

A multifaceted program causes lasting progress for the very poor: Evidence from six countries

Attacking the problem of extreme poverty A persistent concern about wellintentioned efforts to improve living standards for the 1.2 billion people who survive (if it can be called that) on less than

Self-Selection into Credit Markets: Evidence from Agriculture in Mali

1.25 US per day is figuring out what works. A second concern is figuring out whether what works in one setting can be made to work in another. Banerjee et al. describe encouraging results from a set of pilot projects in Ethiopia, Ghana, Honduras, India, Pakistan, and Peru encompassing 11,000 households. Each project provided short-term aid and longer-term support to help participants graduate to a sustainable level of existence. Science, this issue 10.1126/science.1260799 Helping people in Ethiopia, Ghana, Honduras, India, Pakistan, and Peru to become self-employed enables the very poor to become less poor. INTRODUCTION Working in six countries with an international consortium, we investigate whether a multifaceted Graduation program can help the extreme poor establish sustainable self-employment activities and generate lasting improvements in their well-being. The program targets the poorest members in a village and provides a productive asset grant, training and support, life skills coaching, temporary cash consumption support, and typically access to savings accounts and health information or services. In each country, the program was adjusted to suit different contexts and cultures, while staying true to the same overall principles. This multipronged approach is relatively expensive, but the theory of change is that the combination of these activities is necessary and sufficient to obtain a persistent impact. We do not test whether each of the program dimensions is individually necessary. Instead, we examine the “sufficiency” claim: A year after the conclusion of the program, and 3 years after the asset transfer, are program participants earning more income and achieving stable improvements in their well-being? RATIONALE We conducted six randomized trials in Ethiopia, Ghana, Honduras, India, Pakistan, and Peru with a total of 10,495 participants. In each site, our implementing partners selected eligible villages based on being in geographies associated with extreme poverty, and then identified the poorest of the poor in these villages through a participatory wealth-ranking process. About half the eligible participants were assigned to treatment, and half to control. In three of the sites, to measure within village spillovers, we also randomized half of villages to treatment and half to control. We conducted a baseline survey on all eligible participants, as well as an endline at the end of the intervention (typically 24 months after the start of the intervention) and a second endline 1 year after the first endline. We measure impacts on consumption, food security, productive and household assets, financial inclusion, time use, income and revenues, physical health, mental health, political involvement, and women’s empowerment. RESULTS At the end of the intervention, we found statistically significant impacts on all 10 key outcomes or indices. One year after the end of the intervention, 36 months after the productive asset transfer, 8 out of 10 indices still showed statistically significant gains, and there was very little or no decline in the impact of the program on the key variables (consumption, household assets, and food security). Income and revenues were significantly higher in the treatment group in every country. Household consumption was significantly higher in every country except one (Honduras). In most countries, the (discounted) extra earnings exceeded the program cost. CONCLUSION The Graduation program’s primary goal, to substantially increase consumption of the very poor, is achieved by the conclusion of the program and maintained 1 year later. The estimated benefits are higher than the costs in five out of six sites. Although more can be learned about how to optimize the design and implementation of the program, we establish that a multifaceted approach to increasing income and well-being for the ultrapoor is sustainable and cost-effective. We present results from six randomized control trials of an integrated approach to improve livelihoods among the very poor. The approach combines the transfer of a productive asset with consumption support, training, and coaching plus savings encouragement and health education and/or services. Results from the implementation of the same basic program, adapted to a wide variety of geographic and institutional contexts and with multiple implementing partners, show statistically significant cost-effective impacts on consumption (fueled mostly by increases in self-employment income) and psychosocial status of the targeted households. The impact on the poor households lasted at least a year after all implementation ended. It is possible to make sustainable improvements in the economic status of the poor with a relatively short-term intervention.

Impact of savings groups on the lives of the poor

We partnered with a micro-lender in Mali to randomize credit offers at the village level. Then, in no-loan control villages, we gave cash grants to randomly selected households. These grants led to higher agricultural investments and profits, thus showing that liquidity constraints bind with respect to agricultural investment. In loan-villages, we gave grants to a random subset of farmers who (endogenously) did not borrow. These farmers have lower – in fact zero – marginal returns to the grants. Thus we find important heterogeneity in returns to investment and strong evidence that farmers with higher marginal returns to investment self-select into lending programs.

Targeting Ultra-poor Households in Honduras and Peru

Significance We conducted a large randomized evaluation of a savings-led microfinance program across three countries. This evaluation provides important evidence on the impact of a popular development intervention on the lives of low-income households in rural communities by looking at its effects on usage of financial services, microenterprise activity, income, female empowerment, consumption, and the ability to cope with shocks. Savings-led microfinance programs operate in poor rural communities in developing countries to establish groups that save and then lend out the accumulated savings to each other. Nonprofit organizations train villagers to create and lead these groups. In a clustered randomized evaluation spanning three African countries (Ghana, Malawi, and Uganda), we find that the promotion of these community-based microfinance groups leads to an improvement in household business outcomes and women’s empowerment. However, we do not find evidence of impacts on average consumption or other livelihoods.

Inference for S-Gini Poverty Indices

For policy purposes, it is important to understand the relative efficacy of various methods to target the poor. Recently, participatory methods have received particular attention. We examine the ef...

Profitability of Fertilizer: Experimental Evidence from Female Rice Farmers in Mali

Kakwani [Econometrica, 48, 2 (1980), 437-446)] introduced the S-Gini poverty indices as a generalization of Sen’s poverty index. I propose a sample estimator for the indices and establish its asymptotic normality under weak conditions. An explicit variance formula is presented. The poverty line is allowed to depend on the income distribution function.