One-Time Investments Reduce Poverty for 10 Years

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Researchers from the Massachusetts Institute of Technology (MIT) conducted a study demonstrating the enduring positive impacts of a one-time economic intervention on individuals living in poverty. The study focused on a program implemented in West Bengal, India, starting in 2007, targeting those in extreme poverty. Participants, consisting of 266 households, were given the choice of receiving farm animals (cows or goats) or inventory for small businesses. Additionally, participants received a weekly allowance of approximately $7.60 for 30-40 weeks and had access to 18 months of regular visits offering health, life, and business advice.

The research, spanning 18 months, three years, seven years, and 10 years after the program's initiation, assessed economic well-being by examining spending patterns, household incomes, food security, and health. After a decade, participating households demonstrated a substantial increase in daily spending per person, from $1.35 to $3.53, surpassing non-participating households, which increased from $1.35 to $2.90. Monthly household incomes for participants experienced growth from $170 to $680 after 10 years, compared to a rise from $144 to $497 for non-participating households.

The study highlighted that the initial income gains for participating households stemmed from the acquisition of additional farm animals, subsequently empowering them to diversify income sources. Additionally, participating households reported reduced food insecurity and improved health outcomes. Despite an estimated cost of $2,200 per household, the program yielded approximately $8,200 in benefits for each household after a decade.


1- What were the key factors assessed in measuring economic well-being in the study?

2- What was the initial source of income gains for participating households?

3- Despite the approximate cost of $2,200 per household, what was the overall benefit for each participating household after a decade?


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Parts of this lesson are based on: An article Engoo Daily News.