Multifaceted Causes of Poverty

University Of Washington, Seattle WA

Investigators

Abstract

Understanding the drivers and causes of persistent poverty is an important issue that economists have been grappling with for decades. Poverty is complex and multifaceted; therefore, it must be addressed by targeting multiple constraints simultaneously. Most anti-poverty programs have focused on targeting only the poorest in a community, an approach that limits their large-scale applicability and considerably adds to their cost. However, no evidence exists as to whether constraints are specific, requiring individual support to address, or whether households within a community may be subject to similar constraints, enabling poverty alleviation to be tailored at the community-level. This project asks whether a program that targets everyone within a community can be more effective for poverty reduction than one that targets only the poorest. To answer this question, the researchers will use experiments involving several households across many low-income communities. The project will examine effects of the program 2 years after its start, focusing on the effects on household poverty, income, and wealth as well as women’s empowerment. Through this, the researchers will also be able to shed light on the question of whether the causes of persistent poverty are specific to individual households or are common within a community. The results of this research can be used as major inputs into the design and implementation of antipoverty programs and help to establish the U.S as the global leader in anti-poverty research. Graduation programs, where combinations of input handouts, individualized training, coaching, and saving support are provided, are effective at reducing long-term poverty among the poorest households. However, these programs target only the poorest households in a community, limiting their scalability to raise incomes and productivity in entire communities. Such targeting is ineffective as households share transfers with each other, and frequently move in and out of extreme poverty thus reducing the potential for positive spillovers. This research project investigates whether extreme poverty can be reduced if everyone in a community is included in poverty reduction programs. Are there common elements to poverty within a community which mean that providing trainings in groups is effective? The project uses an RCT with many households in which clusters of communities are randomly assigned to receive a multi-faceted antipoverty program or not. The PIs will measure the impact of this program on the economic status of households, prices and economic activity in the community, and women’s empowerment, as well as study the mechanisms through which any impacts occur. The findings from this study will benefit anti-poverty programs in the U.S. and governments across the world that seek to find the most effective program to reduce poverty. The results of this research can also be used as major inputs into the design and implementation of antipoverty programs and help to establish the U.S as the global leader in anti-poverty research. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.