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Pilot programs in Central, South America find new ways to reduce extreme poverty

Pilot Programs in Central, South America Find New Ways To Reduce Extreme Poverty

This fall is a pivotal time for the international development community. We are shifting from a Millennium Development Goal that challenged the world to halve the global extreme poverty rate, to a Sustainable Development Goal that asks us to build on that momentum and work toward a true end to extreme poverty.

Make no mistake; this will not be easy. We will need sustained, shared growth, with a special emphasis on agricultural growth in the poorest countries. We will need programs and policies that are equitable, ensuring that every child has the same opportunities to succeed in life, and that all citizens are able to benefit from fiscal and social systems and representative institutions. And we will need to ensure that those who live in extreme poverty, and those who are vulnerable to falling back in, are protected when global or local markets fail, and when disease and drought persist in their communities.

But alongside this, we will also need new ways of thinking about old problems. Although the global community made enormous efforts to meet MDG 1 five years early, it will be increasingly difficult to reach those who still live in poverty as the world works toward an end to poverty by 2030.  

This week, I am in London at the International Behavioural Insights Conference, which focuses on a promising area of work that can help us more effectively impact the lives of those entrenched in poverty. The 2015 World Development Report on Mind, Society, and Behavior put a spotlight on how the stresses on those living in poverty can make existing barriers to their pathways out of poverty even harder to overcome. Now is the time to take this from theoretical study to practical application.
Fortunately, as a recent study on the chronic poor in Latin America shows, it is not always necessary to develop expensive, brand new programs: it is possible to integrate behavioral insights into existing programs, making small, cost-effective modifications that can help reach people who are left behind by traditional programs. Here are a few examples: 

  • In rural Nicaragua, a program that provided business grants and training explicitly encouraged group interactions, creating a unique space for beneficiaries and local leaders to connect.  This small modification had a big impact: it improved aspirations and business performance, increasing non-agricultural income by US $3.30 per capita and the average value of a household’s animal stock by US$12. These may seem like small numbers, but consider the context: with the average baseline income from non-agricultural activities at $8.75 per capita, the additional income that can be attributed to social interactions and increased aspirations is quite significant – 40 percent.
  • In Bogotá, Colombia, a pilot program looked at how stress shapes the way people see the future. Beneficiaries of a bi-monthly Conditional Cash Transfer program were randomly split into two groups. One group received the full payment as usual twice a month. The other received only two-thirds of the payment twice a month; the last third was put instead into a savings account and disbursed as a lump sum in December, just before children’s school fees were due. This simple modification of timing was effective: while both payment schemes had similar impacts on school attendance, the “save for when you need it” approach made money available to parents when they most needed it, resulting in higher school re-enrollment rates.
  • In Peru, a program tackled the issue of financial inclusion and savings behavior. Early results showed that helping poor families open savings accounts was not enough to increase their savings rates. To address this, the program experimented with mobile text messages to encourage people to save more. Standard reminders, such as “remember to save” worked, increasing savings by 6 percent relative to those who simply had a savings account. Even more effective, however, was combining the reminder with goal-specific messages like “Remember to save so you reach your own savings goal of $20” – this simple phrase increased savings rates by 16 percent
Right now you might be asking yourself, “if this approach works, why isn’t it used everywhere?” Simply put, it is not as easy as it looks to apply behavioral interventions broadly; they have to be tailored specifically to the different groups in different regions that make up the poorest of the poor. What we know was successful in Bogotá, for example, might not work in another Colombian city, let alone in a city across the world. So, one way to take this on is to make sure that policies and programs have the flexibility to address these differences, and to adopt successful approaches that work for the communities they are trying to benefit.
This is just one of the innovations that will move us toward achieving the World Bank Group’s goal of ending extreme poverty by 2030, a goal that now has the full weight of the international community behind it as we adopt the first Sustainable Development Goal. The challenge of reaching those remaining in poverty is daunting, but not insurmountable. It will be crucial for all of us- governments, development institutions, local actors, civil society, and NGOs- to not only build on progress and effective policies and programs, but to also find new ways to move the world toward sustainable, smart, permanent poverty reduction.

This was originally published on Huffington Post


Ana Revenga

Senior Fellow, Brookings Institution

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