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Lifting people out of extreme poverty requires a comprehensive approach, study finds

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A significant portion of the global population lives in extreme poverty. While the numbers have declined in the last few decades, World Bank estimates show that about 1.3 billion people worldwide make less than $1.25 a day. While there's no magic bullet, a new study published in Science demonstrates that an all-of-the-above approach to poverty that involves everything from income to health care can improve the quality of life of the world's poorest.

The study, conducted by the research and policy non-profit Innovations for Poverty Action (IPA) and the Abdul Latif Jameel Poverty Action Lab (J-PAL) at MIT, examines a method known as a the "Graduation model," first developed by BRAC, a large non-governmental development organization (NGO) based in Bangladesh, in 2002, and later refined by the Consultive Group to Assist the Poor (CGAP) and the Ford Foundation in 2006. Currently, the model calls for governments or aid groups to intervene in the lives of poor families in six key ways: providing assets like livestock or goods that can be used to make a living; offering training on how to manage those assets; offering food and cash support to help avoid emergencies; making frequent visits to reinforce skills; giving health education and access to health care; and providing a savings account for future investment. Where previous efforts only focused on a few components, addressing all six simultaneously could not only improve the family's income, but also its sense of well-being. In other words, think of the model as a "big push" for families to gradually and sustainably lift themselves out of hardship.

A big push for families to lift themselves out of hardship

The researchers at IPA and J-PAL tracked more than 21,000 people in six countries — Honduras, Peru, Ghana, Ethiopia, India, and Pakistan — between 2007 and 2014 in order to determine the efficacy of the Graduation model. In a series of randomized control trials, some families were invited into an initial two-year program while others were not, and the team compared how the families' lives had changed by the end of the third year. The group found that the method had lasting positive effects in five of the six countries. Families in India, for instance, saw a 433 percent return on investment, meaning that for every dollar that was spent launching the program there, the families made, on average, $4.33 back for themselves. Those benefits persisted even three years after the end of the study.

Graduation Model

The Consultative Group to Assist the Poor

"There’s nothing new about the Graduation model’s components," study co-author Dean Karlan of Yale University and IPA told The Verge. "Each of these components has been done before. What is new is doing them all together. So you have a lesson for countries to build this into their social protection program. It’s a viable program that’s a good way of improving existing efforts of alleviating poverty."

That doesn't mean the approach is foolproof. In Honduras, the Graduation model actually saw a -198 percent return on investment because the chickens families were given to raise died off. That failure illustrates the importance of choosing the right asset to launching programs in specific countries. Environmental factors like disease, along with cultural and economic ones, can affect the outcome of any initiative. Ultimately, the onus is on the researchers to continue the study into the future.

"Even Messi has to practice!"

"We’re never going to get to some point where we declare this is the perfect model forever and ever," said Karlan. "It’s important for any program to take up a learning attitude about how they run the program, to continuously learn how to refine and how to improve and how to adapt to new conditions, markets, and cultural changes. Even Messi has to practice!"

Nevertheless, the Graduation model is already being used to address extreme poverty in Bangladesh, and Ethiopia is now in the process of expanding its own safety net program to incorporate the model going forward.

In 2013, World Bank president Jim Yong Kim spoke at Georgetown University to outline an agenda for ending extreme poverty by 2030, saying that it's imperative to boost the incomes of the poorest 40 percent in developing and conflict-affected countries. The researchers in today's study hope that their findings prove that the Graduation method is a scalable solution to global poverty that can be implemented by governments and aid groups immediately. It's too soon to tell if every ultra-poor family can be helped in 15 years, but the study provides a framework that may make Kim's goal a reality.