What’s the best way to lift people out of poverty? — Transcript

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1. 0:07In 2018, a non-profit gave every adult
2. 0:11in western Kenya’s Ahenyo village $500.
3. 0:15Most of their families had lived in extreme poverty for generations,
4. 0:19and this sum was roughly equivalent to most recipients’ annual salaries.
5. 0:24Despite all this, the money came with no strings attached
6. 0:28outside a commitment to speak with researchers after two years.
7. 0:32They hoped this influx of cash would lift the villagers out of poverty.
8. 0:37But they also knew this could easily be the latest
9. 0:40in a long line of failed philanthropic interventions.
10. 0:44In the 1960s, charitable organizations began ramping up
11. 0:49their philanthropic efforts,
12. 0:50spending billions funding education, job training, agricultural development,
13. 0:56infrastructure projects, and health care programs
14. 0:59in attempts to help poor countries.
15. 1:02These programs hoped to create a springboard of knowledge and capital
16. 1:06that would foster financial independence and bolster struggling economies.
17. 1:11But when economists started studying this kind of aid
18. 1:15in the late 90s and early 2000s,
19. 1:18they made some surprising discoveries.
20. 1:21After running various randomized control trials,
21. 1:25where one group received education or job training and another group did not,
22. 1:30the researchers found this kind of aid often had minimal impact.
23. 1:35School supplies failed to improve education.
24. 1:38Job training didn’t always raise incomes.
25. 1:41And the benefits of nutrition education varied dramatically from group to group.
26. 1:47These disappointing results even extended to newer philanthropic models.
27. 1:52At this time, many theorists advocated heavily for microfinance,
28. 1:57a model that offered small loans to aspiring entrepreneurs in weak economies.
29. 2:03But while microfinance recipients
30. 2:06consistently repaid their loans with interest,
31. 2:09the programs failed to meaningfully raise their incomes.
32. 2:13All these failures led researchers to consider a strategy
33. 2:17many considered ridiculous:
34. 2:19direct cash giving.
35. 2:21Most philanthropists saw this approach
36. 2:24as the worst kind of shortsighted philanthropy.
37. 2:27They assumed recipients would quickly spend the cash
38. 2:30and then end up back where they started.
39. 2:33But when researchers returned to Ahenyo two years later,
40. 2:36the results were astonishing.
41. 2:38Business revenues were up 65%.
42. 2:43Families saved more and ate more.
43. 2:46Kids were doing better in school.
44. 2:48There was less alcoholism, depression, domestic violence,
45. 2:52and inequality between families.
46. 2:55And these impacts weren’t unique to Ahenyo.
47. 2:58Since this study,
48. 2:59direct cash giving has become one of the most researched poverty interventions,
49. 3:05and it's consistently shown impacts that often exceed traditional aid programs.
50. 3:11In fact, a subsequent study spanning hundreds of Kenyan villages
51. 3:15found the surrounding economy grew by more than twice
52. 3:19what was given out just a year after the cash transfers.
53. 3:24However, direct cash giving isn’t a silver bullet.
54. 3:28Poverty is a generational issue that requires long-term changes to solve;
55. 3:33and since this intervention is relatively new,
56. 3:36we still don’t fully understand the effects of cash giving
57. 3:40on extended timelines.
58. 3:43For example, a Ugandan study beginning in 2008
59. 3:47found that while a cash transfer improved some families’ earnings
60. 3:51over the first four years,
61. 3:52the positive effect disappeared after the next five years.
62. 3:56Then it returned again under the pressure of the COVID-19 pandemic.
63. 4:02Clearly, we still have a lot to learn about how cash giving unfolds over time.
64. 4:08But regardless of what we learn in the future,
65. 4:11the theory for why direct cash giving works
66. 4:14can help change how we think about poverty today.
67. 4:17Where traditional aid programs assume that philanthropists
68. 4:21have the best knowledge of a community's needs,
69. 4:24cash giving programs believe the people experiencing poverty
70. 4:28best understand what they need to escape it.
71. 4:32For example, perhaps for one person,
72. 4:34repairing their home is more important to long-term success
73. 4:38than starting a new business.
74. 4:40And for another, ensuring their child can finish school
75. 4:44might allow them to bring in more money in the future.
76. 4:47Fortunately, we can afford this kind of help.
77. 4:50Today, wealthy countries spend $200 billion a year in international aid,
78. 4:56and philanthropists have a trillion and a half more
79. 5:00sitting in private foundations.
80. 5:02We already have the means to eliminate extreme poverty.
81. 5:07But doing so will require these institutions to trust the expertise
82. 5:11of the people actually living in these conditions.