When Elon Musk pledged to donate several billion towards solving global poverty, it created a clear sense of a problem that would be relatively easy to solve. Research from the Kellogg School highlights how unrealistic that expectation is.
The researchers worked with the government of Niger to conduct a series of randomized control trials to compare various social programs delivered to thousands of households across Niger. They were especially keen to understand the psychosocial constraints that prevent people from capitalizing on economic opportunities. These include things like a lack of role models, and the researchers wanted to test whether tackling these issues might help deliver more successful outcomes.
The results suggest that when government-run programs are able to take a more multifaced approach to the job of reducing poverty, they tend to perform far better both in terms of the economic wellbeing of participants and their psychosocial wellbeing. What’s more, this improvement in outcomes also makes them more cost-effective than they otherwise might be.
Improved performance
Previous programs in the country have tended to be in the form of cash transfers, which were provided to around 100,000 of the poorest households in the country. The government wanted to improve the performance of the program, so teamed up with the researchers and partners at the World Bank to devise some additional interventions.
The team focused on a sample of just under 5,000 households who were already in the existing program. Households were randomly assigned to one of four distinct groups, each of which received the monthly cash transfer. Three of the groups also received additional benefits, however, including components designed to improve the earning potential of the women in the household, such as entrepreneurship training or a savings investment fund.
Each of the three groups received either an additional lump sum cash grant, a psychosocial intervention, or both the cash grant and the psychosocial intervention. The interventions typically involved helping with skills such as goal-setting, problem-solving, or interpersonal communication.
The researchers then measured the changes according to both economic outcomes as well as psychosocial and empowerment outcomes. These factors were measured initially before the interventions and then again 6 and 18 months after the intervention. Data was also recorded on the cost of each intervention to allow a cost-benefit analysis to be performed.
Promising results
The results showed that the households who received the intervention in addition to the cash transfer witnessed improved outcomes across a range of measures, including higher business revenues, improved food security, the consumption of daily household items, and the emancipation of women.
What’s more, each of the three interventions was able to provide significant improvements across a range of psychosocial outcomes. For instance, women consistently reported lower levels of depression while also recording higher life satisfaction and self-efficacy.
Indeed, when the participants were assessed again six months after the intervention, those in the group in receipt of both the psychosocial intervention and the cash grant showed the biggest change. What’s more, this improvement continued to grow when the participants were assessed again at 18 months, which suggests that the intervention has long-term benefits.
“The magnitude of impacts on welfare is large across packages, but the psychosocial components are cheaper than the lump-sum cash grant,” the researchers explain. “In fact, cumulated impacts on consumption 18 months after the end of the intervention already exceed the cost of the psychosocial package and nearly reach the breakeven point for the full package.”
Cost-effective change
In a world of finite resources, the interventions were also cost-effective, as while the total costs ranged from $263 for the psychosocial intervention to $584 for the cash and psychosocial interventions, the benefits were considerably higher.
“The program costs ($ 263 PPP for the psychosocial package, $ 482 PPP for the capital package and $ 584 PPP for the full package) are substantially lower than similar graduation programs implemented in other contexts: $ 1,475 PPP in India, $ 4,215 PPP in Ethiopia, $5,483 PPP in Ghana, $ 6,044 PPP in Pakistan, or $6,183 PPP in Afghanistan,” the researchers explain.
“The Niger intervention was specifically designed in a cost-conscious way, to ensure it could be scaled-up through government systems. Assuming impacts last for perpetuity, the benefits in Niger are 20.9 times larger than costs for the psychosocial package, 13.5 times larger for the full package, and 7.6 times larger for the capital package.”
While there is clearly no one-size-fits-all intervention, the researchers believe that their findings could point development workers in the right general direction to ensure that their programs deliver the best results.
