A 'graduation' from poverty

http://www.eurekalert.org/pub_releases/2015-05/miot-af051415.php

Public Release: 14-May-2015
Massachusetts Institute of Technology

An anti-poverty program tested extensively on three continents has produced sustained gains in individuals' income, wealth, and well-being, according to a study published today in the journal Science.

The program provides very poor people with productive assets, such as livestock, as well as job training, life-skills coaching, and health information. Known as the "Graduation" program, its intention was to examine whether helping the poor in multiple ways simultaneously could be especially effective in fighting poverty.

Overall, with more than 20,000 people enrolled across six countries over a three-year period, the experiment produced a 5 percent increase in per capita income, an 8 percent increase in food consumption, a 15 percent increase in assets, and a 96 percent increase in savings, compared with similar groups of people not enrolled in the program.

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The "Graduation" program was targeted at substantial groups of very poor citizens in Ethiopia, Ghana, Honduras, India, Pakistan, and Peru; about 48 percent of households in the experiment had daily per capita consumption of less than $1.25. While the welfare of recipients was expected to increase in the short run, those gains proved durable.

"It seems to be an improvement that happens and stays intact," Banerjee says, noting that the self-reported mental health of participants improved as well: "They are happier, too."

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The "Graduation" program gave participants a one-time asset transfer, often providing people with animals, such as cows or chickens, from which they could earn income. It supplemented that asset donation with temporary spending support; training on running a business; frequent home visits from project staff; and information about health care. Participants were also encouraged to save money.

Some specifics were tailored to each country, but in each case, participants' results were compared to those of people with similar income levels who did not take part in the project. The wealth gains were observed in five of the six countries; only Honduras was an exception.

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