‘People in poverty lack money. So let’s just give them money’

Sponsor message: 00:00

This Working Scientist podcast series is sponsored by the University of Queensland, where research is addressing some of the world’s most challenging and complex problems. Take your research further at UQ. Visit uq.edu.au

Juliana Gil: 00:25

Hello. Welcome to How to Save Humanity in 17 Goals, a podcast brought to you by Nature Careers, in partnership with Nature Food. I am Juliana Gil, chief editor at Nature Food. In this series, we meet the scientists who have been quietly, incrementally, working towards the globa development targets set by the United Nations.

Back in 2015, world leaders met in New York at a landmark UN conference. The result? A pledge to solve a range of economic, environmental and social issues.

A package of 17 Sustainable Development Goals were born, targets to be reached by 2030. Since then, in a huge effort, thousands of researchers all over the world have been tackling the biggest problems that the planet faces today.

In episode one, we look at Sustainable Development Goal number one: no poverty, and meet a researcher involved in a project in the West African country of Niger, where she’s helping its poorest citizens in an extremely innovative way.

Catherine Thomas 01:42

So I’m Catherine Thomas. I’m an assistant professor of organizational studies and psychology at the University of Michigan. I have my PhD in social psychology. But I’m quite interdisciplinary.

And I’ve been working in conducting research in anti-poverty programming in different capacities over the past decade or so.

The main goal of my research is to address Sustainable Development Goal number one, eradicating extreme poverty everywhere. Eradicating not only financial precarity, but also the indignities that often accompany poverty, the daily challenges that people face, the excruciating decisions that they have to make.

Poverty is financial. It’s about an inability to meet basic material needs, like food and shelter. But it’s also social and psychological. It prevents people from fulfilling basic psychological needs like the need to belong and be accepted by society instead of facing marginalization. The need to feel control and agency over one’s fate rather than feeling helpless and at the whim of others.

Catherine Thomas 02:55

I would say that three of the types of programs that have gotten the most attention for poverty reduction include microfinance, cash transfers, and what’s called the graduation model, which is what we test in our study.

So that’s a multifaceted program. And let me tell you a bit about, kind of, each of these approaches. So microfinance several decades ago was touted as a panacea for poverty.

There’s a lot of enthusiasm for it. Not only could it make entrepreneurs out of people in these informal economies, and help them grow their businesses, but it would also be a sustainable model. You know, programs could get their money back that they put in.

So there’s a lot of excitement about that. But then, we had kind of a randomization revolution in international aid. And so randomistas, as they’re called, conduct randomized control trials of different programs and policies.

And what they were finding was that microfinance was benefiting some people, but it wasn’t benefiting the people it was intended to serve, which includes women living in extreme poverty.

So it turns out that microfinance does a pretty good job for entrepreneurial men who are at or above the poverty line, but not for these people in extreme poverty.

So it just wasn’t working for the poorest populations. Now, there are two schools of thought, two other schools of thought, on reducing extreme poverty.

The first is that it’s just about capital constraints. And the other is that it’s about more than capital. It’s multi-dimensional. And so let’s, let’s think about the first line, the first school of thought.

And that school of thought was just a capital constraint. Instead of asking people to repay those loans that they received from microfinance programs, we just give them the cash. It’s an unconditional cash transfer and say, you know, you can do whatever you like with this, this money.

So we’ve seen that really take hold, particularly in Sub Saharan Africa. And in general, what the literature has found is that cash transfers are highly effective in reducing poverty.

This makes sense at many levels. People in poverty lack money. So let’s just give them money.

Now, there’s a second school of thought, which is that poverty is multidimensional. And one reason, you know, microfinance might not work is because you might, for instance, give people a productive asset.

They might start a business, or they might buy a cow. But if they have a health emergency, and they have to take out loans for that health emergency, or maybe they sell off their productive asset. And then they, to pay for that health emergency, to pay for basic needs, then they fall right back into poverty.

So in this multi-dimensional view, that has borne out programs like the graduation model, which is a multifaceted model, and that really took hold in Bangladesh and South Asia.

So for instance, by encouraging savings groups, by giving people a productive asset, a coach, and trainings for their livelihood. Doing that altogether can help lift households out of extreme poverty, not only in the short term, but also in the long term.

Catherine Thomas 06:24

So Niger is a country in Sub Saharan Africa. Specifically, it’s in West Africa in the Sahel region. So it sits just below the Sahara Desert.

It’s a very arid climate, it’s at the frontline of climate change. That’s actually what prompted the government to invest in this anti-poverty program.

What’s clear here is that subsistence farming is no longer reliable due to climate shocks, like increasing drought.

So the target, the aim of the program, was to help households become more resilient in the face of these climate shocks.

So the typical woman who was participating in this program was about 38 years old, had about seven children. She had no formal education, so is not literate, has no personal cellphone, no business of her own, and no means of transport. So no bike, no motorbike.

Generally, women in these villages rarely leave the village except perhaps to walk to the nearest market.

And so this kind of, you know, reflects a situation of extreme poverty and constraint. The reason I share this is not only to explain the financial precarity that exists here, but also to share that in these remote rural villages the vast majority of resources and opportunities, they all come from women’s social networks,from people they know, from word of mouth.

So this might be close family, extended family, friends, leaders in the village. So her access to capital and economic opportunities that dictates her economic mobility, but so does her relationships and her networks.

So what we were trying to do here was to alleviate extreme poverty. The way that we tried doing that was through three different variations of a multifaceted program.

All the, all three of those programmes included a kind of core package of supports, like savings, a coach, business trainings. But in one of the programs, we also gave a large, unconditional cash transfer of about $300.

In the second one, instead of that cash grant, we provided two psychosocial interventions. So one was a community event designed to introduce the program to the village, and another was a one-week life skills training.

And the third program put it all together in the full package so that included that cash grant along with those two psychosocial interventions. The community incentification and the one week life skills training.

Catherine Thomas 09:15

So the first psychosocial intervention was a community incentivisation. So this included a 20-minute film followed by a group discussion on community aspirations, values and norms.

And the second intervention was a week-long consolidated training, teaching life skills like goal setting, effective communication, problem solving, interpersonal communication, and leadership.

Yeah, the idea behind the video and the communitisation was to show women a different future that might be possible for them, to start to get the wheels turning to think about other examples of women like them who are doing different things, to encourage, you know, new aspirations and also ones that they could see their community supporting, see their husbands supporting, seeing people, kind of getting engaged with, alongside them.

So, you know, they could see that there’s a way to do this with support from other people, rather than resistance from them.

And the way you could do this is by bringing everyone up together. So a woman could invest in her business, and use the profits from that to help her husband start a business. She could share those new learnings and those new opportunities with other women. So this constellation, this positive, you know, upward spiral that could bring individual women and their communities up together. That was the goal of the community film and discussion.

So with this life skills training, it was about teaching very practical skills. So thinking about, you know, how you might make a plan for growing your business or what you might do when you encounter problems, how you problem-solved, overcome them, how you might seek out different perspectives, and ask people for different types of advice.

So there are those sorts of very practical skills, but it was also about helping women build self-confidence and their ability to engage in this new activity of all-farm businesses. They might have been buying, for instance, a new cow, and selling that milk to other people in their village.

Or they were buying inputs for a garden, maybe growing tomatoes, selling them, taking those to market, or making a condiment out of the tomatoes and different spices.

Cymbala is a kind of common condiment that they sell there. With agriculture, they might have been generating new inputs, buying fertilizers. They might have been taking their products to more profitable markets further away. They might have been better at negotiating, getting higher prices for their products.

So women were doing a variety of things. And within the village, they also might have been going around selling biscuits made out of millet, for instance, or selling grilled meat.

So you often see women holding a bucket and then holding something up, a plate or something on their heads, and getting customers as they walk by people’s houses selling them lunch or snacks.

Catherine Thomas 12:35

At a high level, we found that all three program variants, compared with control, led to reduced poverty and reduced food insecurity.

So all program variants were successful in achieving their intended impacts and, and working towards that first sustainable development goal of ending poverty.

So that was really exciting. We did see some different pathways across the different variants, and also some different levels of cost-effectiveness.

And I’ll share more about that in a minute. But first, let me share some of the results on our primary outcomes: extreme poverty and food security.

So extreme poverty was up to last fall defined as living on about $1.90 or less per person per day. Note that the way that that line is calculated, it’s different from our, from the way that our field team calculated it in our trial.

But if we just use that as a very rough benchmark, what we saw was that in our control condition, households were living on about $1.70 per person per day. However in the three variants, that rose to between $1.82 In the capital arm, $1.88 in the psychosocial arm, and $1.95 in the full arm. So bringing the average household just up to or over that line.

In addition, we saw a 20% reduction in experiences of severe hunger. So for instance, having to go a whole day without food. But what likely led to those outcomes were successful improvements and the targets of the program.

So development and diversification of livelihoods, particularly in developing new off-farm business activities, in addition to investing more in livestock and agriculture.

So those new off-farm activities might include things like petty commerce, like selling utensils, or household wares, or processing farm products for sale, so things like pre-prepared condiments or juices or grilled meat.

So what we saw there was annual business revenues of households rose by about $400 in the capital arm, $440 in the psychosocial arm. So those are in the realm of about 30% increases. And then in that full arm they rose $700, so about 50%, by about 50%.

Catherine Thomas: 14:49

The last thing I wanted to note is that the cost-effectiveness varied by arm. So let’s think about the perspective of the government.

All program variants produced similarly positive effects on reduced poverty and food insecurity. However, that psychosocial intervention did so at a fraction of the cost in its implementation. So for calculating benefit to cost ratios one represents the break-even point, for benefits on household consumption to costs incurred for program implementation.

For the psychosocial arm, the benefit to cost ratio was 1.7, to one full for the full arm is 1.3 to one. And those are both significantly greater than that of a capital arm, which is point eight to one.

These are some of the largest benefit-to-cost ratios documented in the literature on multifaceted anti-poverty programs to date.

Catherine Thomas 15:51

For instance, we might take the example of a woman named Hawa, a woman who wasn’t actually able to leave her village very often.

So she had relatively little decision-making control in her household over her business. And so it was very difficult for her to expand her business. She, she actually didn’t interact with other women in her village that often.

But when this program came in, she was able to meet other women regularly outside of her household. That was really exciting for her. She didn’t kind of have solidarity with other women. In fact, she expressed some mistrust of other women in the village.

And we actually see that in our results. We see that more women trusted other people, other women and their husbands, as a result of this program.

Hawa, for instance, might have attended the community incentivisation, she might have brought her couple of young children with her. And she also might have brought her husband. She could have seen this film with other other women in her savings groups and probably talk about it later on in the life skills training that they did.

After the film, she might have talked about it with her husband and other people in her household. And kind of what other households were doing to ensure a safer future for their children, the kind of businesses they were starting. Maybe new businesses, new business ideas that they had, for her, for her husband, from or someone else in the household, maybe a co-wife or a cousin.

And, we did see effects of this in our data. So we saw that, for instance, in the psychosocial arm that women trusted their husbands to do things in line with their own interests. They felt closer to their households.

We also saw that other household members started new businesses. So maybe Hawa’s husband started a charging, a business for charging cellphones while, and that she kind of helped seed fund with her own profits and revenues.

Catherine Thomas: 18:14

I’d like to talk about where we’ve gotten and whether we think that this study, for instance, might contribute to that first sustainable development goal.

So I think it does show a path towards it. I think there are a few conditions that will determine whether it will actually contribute to ending poverty, particularly in Sub Saharan Africa, where it’s most needed.

The first question is about generalizability. Will the results of the study hold in different contexts? This was pretty representative in the whole of Niger.

So I think it would hold in this sort of context. But we have other studies going in different areas in the Sahara that will tell us if it’ll work and those other contexts.

The second is whether the program effects are large enough to actually move households out of extreme poverty. And if they would hold over time. We’ve seen some of that in other studies to date.

So positive growth trajectories at this graduation model, even holding over 10 years. So we’re really hopeful that we’d see those effects for this program, as well.

But time will tell on that question. We were seeing that we were able to generally move households up to that poverty line and the effects were about in line with what we can expect, based on other studies.

And the final condition that will tell us whether the goal of ending poverty will be achieved, is about political will. So it’s about if governments and large nonprofits will take up evidence-based programs like this.

I think that one of our most compelling and striking findings was that our program that included psychosocial programming was one of the most cost-effective multifaceted anti-poverty programs documented in this literature to date.

So now hopefully governments will be encouraged to scale these programs. Because not only do they have rigorous empirical backing for achieving the goal of ending poverty, but they also are highly cost-effective.

So I’m really hopeful for innovations in this space going forward so that governments might be able to scale evidence-based cost-effective solutions.

At this point, eradicating extreme poverty is a question of political will. At this point in time, there are about 700 million people around the world living in extreme poverty.

The number of people living in extreme poverty is generally expected to fall globally, but it’s still continuing to rise in Sub Saharan Africa.

Economist Jeffrey Sachs has calculated that the total cost per year to eradicate extreme poverty would be about $175 billion. That’s within reach. It represents just less than 1% of the combined incomes of the richest countries in the world. And my goal as a researcher is to figure out the most efficient and effective ways of helping to attain that goal of eradicating extreme poverty

Juliana Gil: 21:11

Thanks for listening to this series How to Save Humanity in 17 Goals. Join us again next week when we look at Sustainable Development Goal number two: how to achieve zero hunger. See you then.

Sponsor message: 21:40

This Working Scientist podcast series is sponsored by the University of Queensland, where research is addressing some of the world’s most challenging and complex problems.

Take your research further at UQ. Visit uq.edu.au