The Good News about the Graduation Approach and What’s Next

In the development world, proof of impact is often hard to come by. But new evidence looking at a multi-faceted approach for improving the lives of the extreme poor shows enormous promise.

At an event on June 4 hosted by CGAP, Ford Foundation, J-PAL and IPA, leading researchers presented findings from their evaluations of the Graduation Approach. The excitement in the room was palpable.

Published in Science magazine, the randomized evaluation studied more than 21,000 people participating in the CGAP-Ford Foundation Graduation Program across Ethiopia, Peru, India, Ghana, Pakistan and Honduras between 2007 and 2014. Under the program, beneficiaries received income-generating assets, coaching, access to savings, food supplies and money stipends. In every instance – except for Honduras where the chickens died - participants reported increased income, greater access to food, reduced stress levels, and happier lives as a result of the program. What’s more impressive is that these benefits were still reported one year after the end of the program. The persistence of benefits from a completed aid program are rare, so this was an especially encouraging finding.

Lead researcher Dean Karlan, an economics professor at Yale University and founder of IPA, says the evidence is strong enough for policymakers to ramp up the Graduation Program. “If we are sitting with an NGO or a government and they ask us whether they should do this, our answer is yes,” he enthusiastically told the audience of about 100 policymakers, researchers, practitioners and other development experts at the event.

Co-researcher Esther Duflo, Co-Director of J-PAL and Professor of Economics at MIT, also pointed out the strong proof of concept in the randomized control trials. While participants in the program did not “become Bill Gates overnight”, she said the big headline was the increase in per capita consumption for beneficiaries. Duflo said an interesting result was the impact on economic growth overall once the ultra-poor got on the economic ladder. “The ultrapoor don’t often get on that train,” she said.

While there was enthusiasm over the results, no one sees the Graduation Approach as a silver bullet to immediately propel one-fifth of the world’s population living on $1.25 a day out of poverty. Several policymakers attending the session said high cost was a barrier to implementing the program on a mass scale and there were issues coordinating such programs across government departments.

Despite the high initial costs per household, it’s important to note that in five of the six countries examined, there were significant returns on investment. For example, the average cost per household of the program in Ghana was $1,777 while the return on investment was 133%. In Ethiopia, the average cost was $884 per household with a return on investment of 260%. The returns represent the increase in total consumption as a percentage of the total program cost.

Edgar Leiva from the Secretariat of Technical Planning in Paraguay said the Graduation Program had a certain “sentimental magic” in his country. By 2018, he estimated about 100,000 extremely poor families would be enrolled in the program. In Ethiopia, the government has integrated graduation into its established social safety net program, which reaches up to 10 million people each year.

What emerged from the discussion is that there is still a lot of work to do in learning more about the approach. Said Frank DeGiovanni from the Ford Foundation: “We are probably not even mid-stream of this journey … now we are peeling the onion and we have a ton of other questions to answer.”

Questions raised by researchers, policymakers and others include:

1. How can the program be made more cost-effective?
2. What is the best mix of agencies or bodies to implement this kind of anti-poverty program – is it an NGO, a subcontractor, or the government?
3. So far the program has largely targeted the rural poor. Is this approach applicable to the growing number of urban poor?
4. Is this kind of approach useful in a post-conflict situation?
5. How can this program break the intergenerational cycle of poverty and target investments for youth and children?