What It Takes To Lift Families Out Of Poverty : Goats and Soda New charities pop up all the time. But how do you know which ones work? Economists have come up with a strategy to figure it out. They've used it to tackle one of the biggest problems in the world.
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What It Takes To Lift Families Out Of Poverty

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What It Takes To Lift Families Out Of Poverty

What It Takes To Lift Families Out Of Poverty

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STEVE INSKEEP, HOST:

Nepal's disaster prompts many people to ask how they can help. Ordinary poverty in the developing world raises the same question. It's surprisingly hard to answer that question. Yes, you can buy a goat for a family in India or shoes for kids in Guatemala, but it's hard to measure the results. Now a team of economists has a way to figure it out. NPR's Michaeleen Doucleff reports.

MICHAELEEN DOUCLEFF, BYLINE: Eighteen years ago, Dean Karlan was a new graduate student in economics at MIT. He was reading a bunch of studies on whether aid works, but Karlan says none of them actually answered the question.

DEAN KARLAN: We were tearing our hair out kind of reading these papers and never really feeling like any paper was satisfactory.

DOUCLEFF: The problem was no one was really testing global aid programs to see if they really changed people's lives permanently. Take for instance a charity that gives a family a cow. The charity might check on the family a year later and say wow, they're doing so much better than before the cow. Cows really help, but Karlan says maybe it wasn't the cow. Maybe the family had a bumper crop that year or property values went up in the neighborhood. Researchers haven't been testing that methodically.

KARLAN: They haven't been doing it this way - they haven't been taking the scientific method to problems of poverty.

DOUCLEFF: So Karlan and his colleagues had a radical idea - why not test aid with the same methods doctors use to test drugs? The idea's simple - give some families aid but others nothing, follow both groups and see if the aid actually made a difference in the long run. Karlan, who's now a professor at Yale, says many people were skeptical.

KARLAN: I've had many conversations with people who say you want to do what? Why would you do that?

DOUCLEFF: One issue is that some families go home empty-handed with no aid, so the idea seemed unethical, but Karlan disagrees.

KARLAN: The whole point of this is to help more people. If we find out what works and what doesn't, in five years we can have a much bigger impact.

DOUCLEFF: So Karlan and a bunch of his collaborators decided to try out the idea with one of the toughest problems out there - getting families out of extreme poverty. We're talking about a billion people here. They saw a program in Bangladesh that looked to be affective, so they wanted to test it and see if it could work in a lot of different places. The team went to thousands of communities in six developing countries and found the poorest families. They gave half the families nothing and they gave the other half a whole smorgasbord of aid. Some livestock to start making money...

KARLAN: Here's four goats. Here's equipment and some bees for a beekeeping operation - guinea pigs in Peru. Depending on the site, it was different things that are specifically appropriate for that context.

DOUCLEFF: They also gave them training about how to raise the livestock, some food so they wouldn't eat the livestock and finally some help with their health, both physical and mental. Karlan and his colleagues report the results of this massive experiment in the journal Science this week. So what did they find? Well, the strategy worked pretty well in five of the six countries they tried it in.

KARLAN: We see mental health go up, happiness go up; we even saw things like female power increase.

DOUCLEFF: Families who got the aid started making a little more money and had more food to eat. But here's what really matters - families continue to make more money even a year after the aid stopped.

JUSTIN SANDEFUR: People were stuck. They gave them this big push, and they seemed to be on a sustained, you know, increased income level.

DOUCLEFF: That's Justin Sandefur, an economist at the Center for Global Development in Washington, D.C. He says that's why economists are so excited about this study. It suggests the right kind of aid does help. It lifted the families up just a little bit so they could finally start saving money and start moving out of poverty. But we shouldn't get too excited yet. Poverty isn't solved by any means. Sarah Baird is an economist at George Washington University. She says the families' incomes went up only by a small amount - about 5 percent - and it's still unknown how long this bump will last.

SARAH BAIRD: Moving poverty is hard, so the fact that they were able to move it and it was actually sustainable after a year, I think is important.

DOUCLEFF: She says the findings are a leap forward because they show charities and governments a strategy that works. Michaeleen Doucleff, NPR News.

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