Tackling psychosocial and capital constraints to alleviate poverty.

Many policies attempt to help extremely poor households build sustainable sources of income. Although economic interventions have predominated historically1,2, psychosocial support has attracted substantial interest3-5, particularly for its potential cost-effectiveness. Recent evidence has shown that multi-faceted 'graduation' programmes can succeed in generating sustained changes6,7. Here we show that a multi-faceted intervention can open pathways out of extreme poverty by relaxing capital and psychosocial constraints. We conducted a four-arm randomized evaluation among extremely poor female beneficiaries already enrolled in a national cash transfer government programme in Niger. The three treatment arms included group savings promotion, coaching and entrepreneurship training, and then added either a lump-sum cash grant, psychosocial interventions, or both the cash grant and psychosocial interventions. All three arms generated positive effects on economic outcomes and psychosocial well-being, but there were notable differences in the pathways and the timing of effects. Overall, the arms with psychosocial interventions were the most cost-effective, highlighting the value of including well-designed psychosocial components in government-led multi-faceted interventions for the extreme poor.

Machine learning and phone data can improve targeting of humanitarian aid.

The COVID-19 pandemic has devastated many low- and middle-income countries, causing widespread food insecurity and a sharp decline in living standards1. In response to this crisis, governments and humanitarian organizations worldwide have distributed social assistance to more than 1.5 billion people2. Targeting is a central challenge in administering these programmes: it remains a difficult task to rapidly identify those with the greatest need given available data3,4. Here we show that data from mobile phone networks can improve the targeting of humanitarian assistance. Our approach uses traditional survey data to train machine-learning algorithms to recognize patterns of poverty in mobile phone data; the trained algorithms can then prioritize aid to the poorest mobile subscribers. We evaluate this approach by studying a flagship emergency cash transfer program in Togo, which used these algorithms to disburse millions of US dollars worth of COVID-19 relief aid. Our analysis compares outcomes-including exclusion errors, total social welfare and measures of fairness-under different targeting regimes. Relative to the geographic targeting options considered by the Government of Togo, the machine-learning approach reduces errors of exclusion by 4-21%. Relative to methods requiring a comprehensive social registry (a hypothetical exercise; no such registry exists in Togo), the machine-learning approach increases exclusion errors by 9-35%. These results highlight the potential for new data sources to complement traditional methods for targeting humanitarian assistance, particularly in crisis settings in which traditional data are missing or out of date.

Evaluation of Combined Financial Incentives and Deposit Contract Intervention for Smoking Cessation: A Randomized Controlled Trial.

INTRODUCTION: We evaluate whether a combination of financial incentives and deposit contracts improves cessation rates among low- to moderate-income smokers. METHODS: We randomly assigned 311 smokers covered by Medicaid at 12 health clinics in Connecticut to usual care or one of the three treatment arms. Each treatment arm received financial incentives for two months and either (i) nothing further ("incentives only"), (ii) the option to start a deposit contract with incentive earnings after the incentives ended ("commitment"), or (iii) the option to precommit any earned incentives into a deposit contract starting after the incentives ended ("precommitment"). Smoking cessation was confirmed biochemically at two, six, and twelve months. RESULTS: At two, six, and twelve months after baseline, our estimated treatment effects on cessation are positive but imprecise, with confidence intervals containing effect sizes estimated by prior studies of financial incentives alone and deposit contracts alone. At two months, the odds ratio for quitting was 1.4 in the incentive-only condition (95% CI: 0.5 to 3.5), 2.0 for incentives followed by commitment (95% CI: 0.6 to 6.1), and 1.9 for incentives and precommitment (95% CI: 0.7 to 5.3). CONCLUSIONS: A combined incentive and deposit contract program for Medicaid enrollees, with incentives offering up to $300 for smoking cessation and use of support services, produced a positive but imprecisely estimated effect on biochemically verified cessation relative to usual care and with no detectable difference in cessation rates between the different treatment arms.

Falling living standards during the COVID-19 crisis: Quantitative evidence from nine developing countries.

Despite numerous journalistic accounts, systematic quantitative evidence on economic conditions during the ongoing COVID-19 pandemic remains scarce for most low- and middle-income countries, partly due to limitations of official economic statistics in environments with large informal sectors and subsistence agriculture. We assemble evidence from over 30,000 respondents in 16 original household surveys from nine countries in Africa (Burkina Faso, Ghana, Kenya, Rwanda, Sierra Leone), Asia (Bangladesh, Nepal, Philippines), and Latin America (Colombia). We document declines in employment and income in all settings beginning March 2020. The share of households experiencing an income drop ranges from 8 to 87% (median, 68%). Household coping strategies and government assistance were insufficient to sustain precrisis living standards, resulting in widespread food insecurity and dire economic conditions even 3 months into the crisis. We discuss promising policy responses and speculate about the risk of persistent adverse effects, especially among children and other vulnerable groups.

Unconditional cash transfers for clinical and economic outcomes among HIV-affected Ugandan households.

BACKGROUND: HIV infection has profound clinical and economic costs at the household level. This is particularly important in low-income settings, where access to additional sources of income or loans may be limited. While several microfinance interventions have been proposed, unconditional cash grants, a strategy to allow participants to choose how to use finances that may improve household security and health, has not previously been evaluated. METHODS: We examined the effect of an unconditional cash transfer to HIV-infected individuals using a 2 × 2 factorial randomized trial in two rural districts in Uganda. Our primary outcomes were changes in CD4 cell count, sexual behaviors, and adherence to ART. Secondary outcomes were changes in household food security and adult mental health. We applied a Bayesian approach for our primary analysis. RESULTS: We randomized 2170 patients as participants, with 1081 receiving a cash grant. We found no important intervention effects on CD4 T-cell counts between groups [mean difference 35.48, 95% credible interval (CrI) -59.9 to 1131.6], food security [odds ratio (OR) 1.22, 95% CrI: 0.47 to 3.02], medication adherence (OR 3.15, 95% CrI: 0.58 to 18.15), or sexual behavior (OR 0.45 95% CrI: 0.12 to 1.55), or health expenditure in the previous 3 weeks (mean difference $2.65, 95% CrI: -9.30 to 15.69). In secondary analysis, we detected an effect of mental planning on CD4 cell count change between groups (104.2 cells, 9% CrI: 5.99 to 202.16). We did not have data on viral load outcomes. CONCLUSION: Although all outcomes were associated with favorable point estimates, our trial did not demonstrate important effects of unconditional cash grants on health outcomes of HIV-positive patients receiving treatment.

Impact of savings groups on the lives of the poor.

Savings-led microfinance programs operate in poor rural communities in developing countries to establish groups that save and then lend out the accumulated savings to each other. Nonprofit organizations train villagers to create and lead these groups. In a clustered randomized evaluation spanning three African countries (Ghana, Malawi, and Uganda), we find that the promotion of these community-based microfinance groups leads to an improvement in household business outcomes and women's empowerment. However, we do not find evidence of impacts on average consumption or other livelihoods.

Development economics. A multifaceted program causes lasting progress for the very poor: evidence from six countries.

We present results from six randomized control trials of an integrated approach to improve livelihoods among the very poor. The approach combines the transfer of a productive asset with consumption support, training, and coaching plus savings encouragement and health education and/or services. Results from the implementation of the same basic program, adapted to a wide variety of geographic and institutional contexts and with multiple implementing partners, show statistically significant cost-effective impacts on consumption (fueled mostly by increases in self-employment income) and psychosocial status of the targeted households. The impact on the poor households lasted at least a year after all implementation ended. It is possible to make sustainable improvements in the economic status of the poor with a relatively short-term intervention.

Health education for microcredit clients in Peru: a randomized controlled trial.

BACKGROUND: Poverty, lack of female empowerment, and lack of education are major risk factors for childhood illness worldwide. Microcredit programs, by offering small loans to poor individuals, attempt to address the first two of these risk factors, poverty and gender disparity. They provide clients, usually women, with a means to invest in their businesses and support their families. This study investigates the health effects of also addressing the remaining risk factor, lack of knowledge about important health issues, through randomization of members of a microcredit organization to receive a health education module based on the World Health Organization's Integrated Management of Childhood Illness (IMCI) community intervention. METHODS: Baseline data were collected in February 2007 from clients of a microcredit organization in Pucallpa, Peru (n = 1,855) and their children (n = 598). Loan groups, consisting of 15 to 20 clients, were then randomly assigned to receive a health education intervention involving eight monthly 30-minute sessions given by the organization's loan officers at monthly loan group meetings. In February 2008, follow-up data were collected, and included assessments of sociodemographic information, knowledge of child health issues, and child health status (including child height, weight, and blood hemoglobin levels). To explore the effects of treatment (i.e., participation in the health education sessions) on the key outcome variables, multivariate regressions were implemented using ordinary least squares. RESULTS: Individuals in the IMCI treatment arm demonstrated more knowledge about a variety of issues related to child health, but there were no changes in anthropometric measures or reported child health status. CONCLUSIONS: Microcredit clients randomized to an IMCI educational intervention showed greater knowledge about child health, but no differences in child health outcomes compared to controls. These results imply that the intervention did not have sufficient intensity to change behavior, or that microcredit organizations may not be an appropriate setting for the administration of child health educational interventions of this type. TRIAL REGISTRATION: This study is registered with ClinicalTrials.gov, NCT01047033.

Small individual loans and mental health: a randomized controlled trial among South African adults.

BACKGROUND: In the developing world, access to small, individual loans has been variously hailed as a poverty-alleviation tool - in the context of "microcredit" - but has also been criticized as "usury" and harmful to vulnerable borrowers. Prior studies have assessed effects of access to credit on traditional economic outcomes for poor borrowers, but effects on mental health have been largely ignored. METHODS: Applicants who had previously been rejected (n = 257) for a loan (200% annual percentage rate - APR) from a lender in South Africa were randomly assigned to a "second-look" that encouraged loan officers to approve their applications. This randomized encouragement resulted in 53% of applicants receiving a loan they otherwise would not have received. All subjects were assessed 6-12 months later with questions about demographics, socio-economic status, and two indicators of mental health: the Center for Epidemiologic Studies - Depression Scale (CES-D) and Cohen's Perceived Stress scale. Intent-to-treat analyses were calculated using multinomial probit regressions. RESULTS: Randomization into receiving a "second look" for access to credit increased perceived stress in the combined sample of women and men; the findings were stronger among men. Credit access was associated with reduced depressive symptoms in men, but not women. CONCLUSION: Our findings suggest that a mechanism used to reduce the economic stress of extremely poor individuals can have mixed effects on their experiences of psychological stress and depressive symptomatology. Our data support the notion that mental health should be included as a measure of success (or failure) when examining potential tools for poverty alleviation. Further longitudinal research is needed in South Africa and other settings to understand how borrowing at high interest rates affects gender roles and daily life activities. CCT: ISRCTN 10734925.