Research & Analysis

Eliminating Extreme Poverty

The share of the world’s population living in extreme poverty has dropped dramatically. Between 1990 and 2011, the population in developing countries living on less than $1.90 a day dropped from 37 percent to 14 percent (Ferreira et al. 2015). Despite this progress, almost 900 million people still live on less than $1.90 a day. Moreover, there is an important geographical disparity among the progress: 43 percent of the people in sub-Saharan Africa are currently living below this line, the poverty rate in South Asia is 19 percent, and progress in Latin America has slowed in recent years. Continued reduction of extreme poverty will require targeted interventions to help the poorest increase their standard of living.

Effective social protection programs are critical to this effort. Livelihood development programs, lump-sum cash transfers, and graduation programs have the potential to help the very poor increase incomes to move out of extreme poverty. Livelihood development programs encompass a wide range of interventions supporting income growth of poor people, including training on new agriculture technologies, business development services, agricultural value chain development, and access to market information. Unconditional cash transfers are a relatively simple intervention of providing a lump-sum, one-off unconditional grant. Graduation programs, on the other hand, take a holistic approach of combining livelihood promotion and safety nets to create time-bound pathways out of extreme poverty. Graduation programs are also rigorously targeted to the extreme poor through a sequence of geographical and participatory methodologies and means testing (typically through a poverty scorecard). It is important for policy makers to understand which of these three program types (livelihood development programs, lump-sum unconditional cash transfers, and graduation programs) generates the greatest and most sustainable impact for the extreme poor to ensure effective use of scarce resources.

To address this question, this research identified 30 livelihood development programs, 11 lump-sum cash transfer initiatives, and seven graduation programs and compared results from impact evaluations and project-specific cost data. This research did not screen out studies based on the targeting approach of the respective interventions, since only the graduation programs focused solely on the poorest. A large proportion of the evaluation reports for livelihood and lump-sum cash transfers do not adequately discuss targeting or use a sufficient set of indicators in explaining the profile of targeted beneficiaries.