Poverty reduction: Learning from the field


“There are people in the world who are so hungry, that God can only appear to them in the form of bread. “- Mahatma Gandhi

Ten years ago Indonesia was struggling with its biggest social assistance program. His Raskin program, Rice for the Poor, received $ 1.5 billion a year but was almost always curtailed by bureaucracy and corruption, thwarting the goal of distributing 15 kilos of rice a month to the poorest among them. poor people.

Indonesia has avoided more stringent controls but has decided to put its researchers in touch with staff at J-PAL or the Abdul Latif Jameel Poverty Action Lab, a global research center working to reduce poverty through policy based on science through what is now called RCT, randomized controlled trials. J-PAL is based at the Massachusetts Institute of Technology (MIT) with global networks. J-PAL was founded in 2003 by 2019 Nobel Laureates in Economics, the husband-and-wife team of Abhijit Banerjee and Esther Duflo, both of MIT, and Sendhi Mullainathan, formerly of Harvard.

The collaboration focused on capacity building by sensitizing the beneficiaries themselves to the program and its benefits. Based on the results of the RCT, these initiatives have proven to be very effective, so that Indonesia has managed to issue 15 million cards, coupled with two other money transfer programs. There was an immediate escalation to $ 4 billion in aid to the very poor.

What made the approach work was surprisingly simple.

The steps employed made it possible to bridge any potential disconnection between the various theories of poverty and the real situation on the ground. This business requires rigor because evidence must be produced and accessible to the government. Contrary to the reservation of another Nobel laureate, Angus Deaton, that “showing that a treatment works in one situation is extremely weak evidence that it will work the same way elsewhere,” economists at J-PAL in fact recognize that they must also obtain the results validated in other contexts. Most importantly, “implementation needs to be monitored to bring further reality checks to policy conclusions.”

Equally important, J-PAL would not assume that its well-trained laboratory scientists are superior to recipients.

There is wisdom in Banerjee and Duflo’s 2011 book, Bad economy, which many of us would refuse to accept: “The poor are no less rational than anyone else, quite the contrary. Precisely because they have so little, we often see them thinking very carefully about their choices: they have to be savvy economists just to survive.

But the poor continue to suffer. As the authors explained various facets of poverty, it is difficult to understand “why the poor need to borrow to save, why they don’t get free life-saving vaccinations but pay for drugs they don’t need,” why they start many businesses but grow none, and many other confusing facts about living on less than 99 cents a day.

For Banerjee, the way forward “is to abandon the habit of reducing the poor to cartoon characters and take the time to truly understand their life, in all its complexity and richness.” It is refreshing to read that hope is crucial and knowledge is essential to tackle poverty on the ground.

For Yanis Varoufakis, former Greek Minister of Finance and professor of economics at the University of Athens, the work of Banerjee and Duflo can be seen as another attempt by economists to defend their profession. Ever since Queen Elizabeth of England asked the disarming question of why no one saw the global financial crisis coming and how Nobel Prize-winning economists provided the theoretical underpinnings for structured derivatives that led to “weapons of massive financial destruction, ”economists have been criticized for many years. Some opportunist politicians have “militarized discontent with mainstream politics and oppressed it in the service of a xenophobic ideology that denies the facts and serves the interests of a nativist and global oligarchy.”

The couple’s work is exceptional in that they have clarified many issues such as migration, trade, inequality and climate change that the bad economy has distorted in public debate and demolished many of its false assumptions. Varoufakis praised the couple’s humility in accepting that the economy cannot tell us everything and the pride in showing the part of the economy in our limited understanding. As the couple pointed out, “no iron law of economics prevents us from building a more human world.”

A good example of trying to build a more humane world is what International Ministries of Care (ICM) are doing in the Philippines. Led by its President and CEO, David Sutherland, and his team of volunteers and staff, the ICM has been in the field since 1992. There is nothing new about seeking the support of those who are financially able to. help those who suffer from less ability to chart a better future. It is no different from taxing wage earners to finance, first, infrastructure for the whole population and, second, economic and social services, especially for the poor. This is fair and should lead to less harm.

What is different is the ICM’s intention to help break the vicious cycle of poverty in the Philippines where “about a quarter of the 109 million (people) live below the poverty line”. Ultra-poor families are reported to subsist on P 25 per day, with no defined job skills, no productive assets, and reside in incredibly isolated rural areas.

For example, the ICM is implementing “Transform”, a weekly four-month capacity building program that has covered nearly 10,000 communities since 2009 with some 256,000 households and 1.4 million family members. Probably without using the entire RCT, the ICM networks people in the zones and appropriately provides key information to ministries about the real situation on the ground. Impact studies are also carried out to guide future strategies.

The ICM supports parents in many areas of ordinary life. Because words are cheap, ICM also invests in people’s access to livelihoods to make them self-reliant and resilient. Along with doctors and church pastors from Negros in Bohol, Panay in Palawan and Cebu in Mindanao, ICM has also been able to provide support for better nutrition, clean water, medical care. and even safe pregnancies.

Sending their qualified beneficiaries to school is also continued by engaging with some 2,000 public schools in remote areas with accreditation from the Ministry of Education. ICM now has more than 1,000 local women who have been trained to provide health care to more than 1,000 local communities, monitoring the health needs of 130,000 residents and having performed 500,000 home medical examinations. In short, there is a duplication of capacities, the echo is alive and the virtual discipleship on how to deal with poverty is in high gear. This is how sustainability is built.

The health pandemic of 2020 and 2021 made the work of the ICM more difficult. Before the health crisis, many families survived on only 14 P per day, 29% had no electricity, while 43% reported illness in the family. Sutherland cited 72% of their beneficiaries saying they were making a lot less than before. Those who are richer must have heard his terrible report and call that during their October 28 fundraising campaign, the ICM managed to exceed the amount requested last year and in doing so raised the bar for the fight. next year against extreme poverty.

The ICM’s approach is therefore globally consistent with Bad economyargument that by paying attention to the evidence, one can understand not only the real causes of poverty, but also how to end it. It should also help donors assess how to avoid wasting their resources on poverty reduction initiatives that are primarily based on generalized assumptions about the poor.

Those who believe in the social impact, that is to say that the changes in society must be great, have been disappointed all these years especially in the fight against poverty.

Banerjee and Duflo subscribe to its linearity, those small but sustained adaptations and adjustments that drive impact and feedback.

Incrementalism is its other name.

Diwa C. Guinigundo is the former deputy governor of the monetary and economic sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was Deputy Executive Director of the International Monetary Fund in Washington, DC. He is the senior pastor of the international ministries of the fullness of Christ in Mandaluyong.

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