Citizen Wealth for the Rural Global Poor

ScreenHunter_120_Aug._26_15.38New Orleans     About the only global response to rural poverty, where millions are living on less than $1.25 per day, has been where the poor have voted with their feet and migrated to urban areas, often finding themselves in similar impoverishment. Some small hope is breaking through the hardscrabble though in a study by the much touted Poverty Lab researchers and authors, Esther Duflo and Abhijit Banerjee at the Massachusetts Institute of Technology. Their finding is that if you transfer assets to poor families and, importantly, also train them in asset management, along with other basic citizen wealth skills like money management, basic health maintenance, and similar foundational tools, and monitor the process regularly with outreach workers in a people-centered program, then, not surprisingly, it makes a difference.

With this number of “if’s,” it is already obvious that we’re climbing almost as many mountains as we are trying to level in order to impact abject rural poverty. Nonetheless, Duflo and Banerjee studied similar programs piloted by a number of NGO’s including Oxfam, Heifer International, World Vision, and BRAC in Bangladesh that ran projects that transferred ownership of livestock or chickens to low-income rural families. The programs they studied were run by local nonprofits in Ghana, Ethiopia, Honduras, India, Pakistan, and Peru. Since ACORN International organizes in cities in three of those countries, this item quickly caught my eye.

According to The Economist the program in each country allowed 10,000 families in the half-dozen countries to select an asset gift. The families received full support along with a one-year allowance of money sufficient to purchase a kilo of rice on a daily basis.   After two years the family consumption of food had risen by 5% and the value of family citizen wealth had increased by 15%, both significantly higher improvements when measured against a control group not in the programs. The researchers report that each person in the program worked an additional 17.5 more minutes a day.

Yes, these are very, very modest results, but hope – and sometimes effective projects – rests of such slender reeds. The costs are not inconsiderable ranging from $414 per person in India and $3122 in Peru. If the average per participant across all six countries was only $1000, the investment would have been $10 million, if $2000, then $20 million – a lot of money, but not outrageous.

The Economist columnist speculated that India could just move 1% of their GNP in this direction to replace 0.3% of their GNP being spent currently on a popular, but controversial, rural workfare program designed to keep population in the villages. That’s unlikely. He also wants to argue that the justification of the costs would be the fact that this program in his view would be a magic bullet – a one-off solution, rather than a continuing investment. Sad to say, and the evidence is everywhere, but there is no one-off expenditure solution to poverty, particularly when we are holding onto marginal improvements as little as 5% in nutrition and 15% in “value,” which is hard wealth to retain.

The same columnist also believes that you can eliminate the most expensive part of the program, not surprisingly the family-to-family organizing program where outreach workers are part of the support, instruction, and encouragement network. He bases this on an apple-and-oranges interjection of something from Uganda, which undermines the rigor of the report, which is the whole point of the Poverty Lab and its claim to fame. Nonetheless eliminating the people driving the change likely undermines this narrow progress on a whim.

I’m not quibbling though. Whether abject rural poverty or low-and-moderate income families in cities around the world, creating real citizen wealth is the ticket, and this progress, no matter how slight, warrants serious attention, even if a real celebration is still many years in the future.


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