Ending global poverty individually

[Swan Red]

Currently there are 1.2 billion people living on less than the equivalent of $1.25 a day, I say equivalent as it’s the spending power of $1.25 in the US not what that sum buys you in the domestic market.

 

The good news is that this is down from 1.9 billion in 1990 when the figure was $1.

 

I’ve followed discussions around giving to charity for a while and efficacy of charity along with administrative overheads are often cited as reasons against donating more. It seems to me that if what we are looking at is ensuring our donations get to those that most need them in the form that they most need there are now options to do this. One of them is a charity I’ve been supporting for a while.

 

http://www.givedirectly.org/

 

I’m excited by the approach because I think cash the best way to empower people while also creating economic activity. We empower people by enabling them to make decisions, we facilitate those decisions by providing them with the cash to do so. It’s really simple and studies by GiveWell are really positive, they've named it their top charity.

 

http://www.givewell.org/about

 

“a non profit dedicated to finding outstanding giving opportunities”

 

There’s a blog I follow, I don’t always agree with the author but his arguments in favour of transferring cash to the poorest to bring them above this line I find compelling. I’m also aware that I’m pretty committed to the idea anyway so take this fwiw. It’s an interesting read regardless.

 

http://www.philosophersbeard.org/2014/02/how-to-end-destitution.html

 

The economist article he cites up top is also a pretty interesting read.

 

http://www.economist.com/news/briefing/21578643-world-has-astonishing-chance-take-billion-people-out-extreme-poverty-2030-not

 

There are interesting and important questions about the responsibility of governments, how aid is provided, what role have individuals in ending poverty globally but it seems we have a chance at making a positive difference if only for those recipients of cash.

 

I think sometimes we focus too much on what we can’t do, we can’t bring everyone out of poverty but we can someone. There was a study on sentencing that resulted in a bias being identified called the scope severity paradox, our reaction to crimes and famines often result in our being less responsive and taking action to resolve as the numbers affected increase. It’s one of the reasons that famine campaigns often run with a picture of a single person it leverages another bias the identifiable victim bias where we can empathise with a single victim in ways that we can’t with a group. But behind the big numbers are individuals and given we can get cash directly to them I think we should.

 

I’m not soliciting here fwiw I’m genuinely interested in other peoples perspective.

Edited May 29, 2014 by Swan Red

[Tosh]

What a brilliant idea - the simple ones often are!

[Murphman]

One of the biggest 'put offs' is aid not getting to where it's intended, doing this on an individual basis is brilliantly simple and I for one am very impressed, what a great concept.

 

This needs proper development as a principal, right across the developed world.

[Earl Hafler]

I think sometimes we focus too much on what we can’t do, we can’t bring everyone out of poverty but we can someone

 

This is true.

 

$1.25 as spending power in the US ? ffs. When do you stop questioning yourself about that ?!

[Swan Red]

Yeah I couldn't really.

 

I don't want to get pious but for all my talk of inequality I didn't think I was doing enough. I had concerns with charity. I'd argued previously that charity can reduce the burden on states sufficiently it results in an abrogation of their duty. By giving to charity we merely cover the expense that should come from the state. I'd even go so far as to say I'd happily pay higher taxes for better service provision. If I am thus prepared to pay more tax then surely it makes sense for me to take the % of my salary I would be happy to give to tax as a starting point and donate that money directly.

 

I understand that this doesn't make it better than tax given it's reliance on individual donations and I still have a preference in many cases for state subsidised aid, but this is empowering to me. It gives me an opportunity to make a tangible difference to someone, the money I donate goes to a person that the money wouldn't go to if I didn't give. That's a really big idea, when we're asked to donate it's really difficult to identify just what difference the money we can donate will make. Individually contributions seem to get lost but this results in a number of households being provided with an annual salary equivalent to $1.40 a day.

 

It's simplicity has me won over and the research is really strong.

[Sion]

My issue with this type of funding is it relies on largely uneducated people acting rationally with money that will be probably the biggest sum they'll ever see.

 

I'm sure most would have good intentions - its not like the recipients are responsible for their own plight - but I'd have my doubts as to whether, without a robust support system, people would be able to truly address the root cause of their poverty.

[Swan Red]

It's a legitimate concern but it's one that the research covers in some depth. I'll get back to it, it's late, and capture the relevant parts of follow up reports but there's no marked increase in alcohol or tobacco spending a lot goes on tin roofs given that a non tin roof is part of the qualifying criteria and money is directed towards health and education.

[Swan Red]

http://www.givewell.org/international/top-charities/give-directly#FindingsfromtheRCT

 

Total non-land assets. Receipt of transfers increased households’ non-land assets by an average of $279.129 Households that received large transfers increased their total non-land assets by about $253 more than households that received small transfers.130 The largest categories of asset increases were livestock ($85), durable goods ($53; primarily furniture), and savings ($10).131 Transfers also increased the likelihood that a household had an iron roof by 23 percentage points.132 Recipients of large transfers were 23 percentage points more likely to have iron roofs at end-line than recipients of small transfers.133 The RCT estimated that iron roofs cost about $564 USD PPP and had a return on investment of between 7 and 14%, but the source of this data was unexplained.134

 

Business expenses. Treatment households spent about $13 per month more than control households on business expenses, which were primarily made up of non-durable expenses on non-agricultural businesses.135 There was no evidence that recipients of large transfers invested more in business expenses than recipients of small transfers.136

 

Health expenditures Treatment households spent about $3 per month more than control households on health expenditures.137 There was no evidence that recipients of large transfers spent more on healthcare than recipients of small transfers.138 This spending was also included within the estimate of spending on consumption, below.

 

Education expenditures. The average treatment household with children spent about $19 more per month on education than the average control household with children although this estimate was imprecisely measured and not statistically different from zero.139 There was no evidence that households receiving large transfers spent more on education than households receiving small transfers.140 This spending was also included within the estimate of spending on consumption, below.

 

Consumption. Treatment households consumed about $36 more per month than control households.141 According to point estimates, recipients of large transfers spent about $20 per month more on consumption than recipients of small transfers but this difference was not statistically different from zero.142 Slightly more than half of this additional consumption was on food.143 This additional consumption also included increased spending on social expenditures and various other expenditures.144

 

Alcohol and tobacco. Treatment households did not increase their spending on alcohol or on tobacco.145

 

The impact of this expenditure on life quality is less clear in the case of health and education spending. Some other subjective criteria was considered as well.

 

Psychological well-being. Treatment improved an index of psychological wellbeing by 0.20 standard deviations.152 There was no observable effect on cortisol for the treatment group as a whole although cortisol, an indicator of stress, was slightly lower in the large transfer group than the small transfer group, a difference that was statistically significant at the 10% level when controls were included in the model .153 Recipients of large transfers measure 0.35 standard deviations higher on the well-being index than recipients of small transfers.154

 

Female empowerment. Control households in treatment villages measure 0.23 standard deviations higher on an index of female empowerment than control households in control villages.155 This suggests that cash transfers to a village unexpectedly empowered females in both recipient and non-recipient households. The researchers propose potential mechanisms for this effect, but are explicit that these measured results are surprising and warrant further investigation.156 Note that we report this result for the sake of comprehensiveness but would guess that it is more likely to be random than real.

 

The evidence that empowering people results in good spending choices looks strong.

[KBR]

My issue with this type of funding is it relies on largely uneducated people acting rationally with money that will be probably the biggest sum they'll ever see.

 

I'm sure most would have good intentions - its not like the recipients are responsible for their own plight - but I'd have my doubts as to whether, without a robust support system, people would be able to truly address the root cause of their poverty.

This is a valid point.

It's something I have seen first hand on many occasions from supporting people within my own local community in Bangladesh. I sometimes find that people suffer from a "psychological poverty"... where a condition has taken root so firmly in their mental state that no matter what you do or how much money you give them, they seem destined to always remain in poverty.

 

Over the years, my siblings and I, (along with my old man when he was around) have funded the set up small businesses, helped pay for education on individual basis into many fields, established education institutes, funded schools/orphanages, religious seminaries, social & health care programs, paid for people to go abroad for work on working visa's - along with a vast array of other things that crop up from time to time.

 

We've dished out so much money over the years, and the tragic thing is... it's not made the blindest bit of difference in most cases. The same people we have helped over the years, still are no better off.

 

One thing I've learnt over time, is that it's important to get to people when they are young... show them that their lives need not be spent in poverty, and educate them on how to create lasting changes in their lives. It's only in the last 14 years or so we've started to see some changes.

 

There are times you feel like you're banging your head against a brick wall... but I guess its something you just have to keep working on. Slowly but surely...

[cymrococh]

I heard on some podcast that the most 'ethical' way to give money was to give to charities who buy mosquito nets.

 

I assume that it has wider implications in that as soon as people don't have malaria to worry about, they can be more productive.

 

EDIT: I see that givedirectly is now top of the charts.

Edited June 3, 2014 by cymrococh

[Swan Red]

I heard on some podcast that the most 'ethical' way to give money was to give to charities who buy mosquito nets.

 

I assume that it has wider implications in that as soon as people don't have malaria to worry about, they can be more productive.

 

EDIT: I see that givedirectly is now top of the charts.

 

Yeah one of the key areas is net distribution. Previously their top rated charity had been the Against Malaria Foundation, the reason they removed them from the list of top charities is because of concerns over room for funding, due to local political issues they were having problems deploying the nets. They have just signed a big distribution deal though so that may change later in the year.

 

Two of the current top 3 are involved in deworming initiatives which has a similar impact.

 

Kamal, that's a good post and I'm going to get back to it when I have some time. I understand concerns and appreciate your experience but it's the reason that effective interventions have to be measured and transparent.

[matty]

I think most people grow up expecting their lives to end up like the people they see around them. No matter how much we love famous role models, if you grow up surrounded by poverty you tend to expect that to be your lot, and it's a self fulfilling prophecy. Of course, it can be broken, but it needs long-term intervention and crucially the encouragement and determination of parents. Both of my parents grew up in extremely modest circumstances, but look at me, putting balsamic vinegar on my chips.

Edited June 3, 2014 by matty

[Swan Red]

Tradizionale or IGP Matty you bourgeois b*****d ya.

 

I tend to agree that it needs long term intervention and there are risks associated with targetted grants to the poorest individuals but I think while we assess the implications and effectiveness of these interventions it's still better to do something rather than nothing.

[matty]

Tradizionale or IGP Matty you bourgeois b*****d ya.

 

I tend to agree that it needs long term intervention and there are risks associated with targetted grants to the poorest individuals but I think while we assess the implications and effectiveness of these interventions it's still better to do something rather than nothing.

I agree. The hit/miss ratio will always be there but if you aren't doing any harm with the misses then why wouldn't you try?

 

And anyone who opposes it needs to be sure they are doing something concrete to bring about the alternative solution, which is getting a government that believes in the intervention necessary.

 

IGP.

[Ed the Wool]

but look at me, putting balsamic vinegar on my chips.

 

You dirty b*****d. Warrington's shame.

 

Thanks for posting this Vic, will come back to this thread and read properly when I have a bit longer. Sounds really interesting.

[Swan Red]

No worries Ed, what startled me when I started looking into this was that there's approximately 40,000 deaths a day due to poverty, it's an Anfield every day. It's scandalous.

[DecidedByPoll]

I've found that one of the best ways to give is kiva.org

 

It's a loan based system enabling individuals around the world to start a business and earn money. All the individuals are validated by charities in the countries in which they live.

 

Cheers for the link SR, am going to have a good dig around that.

[Swan Red]

There's been some really interesting work around microloans and some good results.

 

I understand people's reservations and concerns but it's reassuring knowing that there's good work being done around deriving the maximum benefit from giving.

[growler]

Nothing beats giving time. Every time I go to India, I'll visit some local rural schools and buy some equipments books etc, one year, I paid for lunch for the year. The theory being if the kids are being fed, they'll turn up.

 

Getting to the kids is the right way.

 

Challenges I've find are local crime guys and leaders who hate to see others step up. The other is the opportunity on going. At some stage, the kid has to move on and out - leaving the family is a big step.

[melia]

this is really interesting. Thanks for posting the links.

[KBR]

There's been some really interesting work around microloans and some good results.

 

I understand people's reservations and concerns but it's reassuring knowing that there's good work being done around deriving the maximum benefit from giving.

Professor Yunus from Bangladesh is an advocate for microcredit - although there's been mixed reports as to how effective it can be.

 

I'm of the personal opinion that any form of finance with interest attached to it will inevitably cause some form of problems along the way. We have major issues with personal debt in the developed nations, so it's inevitable the same problems will arise where people are already in poverty, have low incomes, and there is a widespread lack of education. I think it is something you have to judge on an individual basis from person to person... some manage it better, while others simply don't.

 

On a more positive note... I have seen this work from first hand experience where a 45 year old lady in my community took out a small loan and started an organic poultry business. She managed to repay her loan within 2 years. Her profit margins were unbelievable. She would buy baby chicks that are a month old for around 30 taka which is roughly 22pence each, and sell them once they hit 4 months old for about 150 taka/ £1.15 each. Factoring farming has taken hold in Bangladesh and any organic poultry commands a premium. She now sells about 50 a month to one restaurant in the main town bringing in about £60 in income a month for herself... which probably isn't much to the likes of us, but it makes her one of the more comfortable people in her village.

 

If that Venky's lot can buy a football selling chickens, then maybe we should all become chicken farmers!

[Swan Red]

My preference is for cash transfers rather than loans. There are conflicting reports and again the GiveWell write up on microloans is pretty interesting.

 

http://blog.givewell.org/2013/01/04/cash-transfers-vs-microloans/

 

While some of the arguments for micro loans can be supported it's generally not preferable to cash transfers. I share this opinion though it has been a while since I looked into it.

[Swan Red]

And TBF there are challenges with cash transfers, whether there is any animosity towards those that receive the transfers from those that don't, whether there's any cheating in attaining qualification, there seems to be some in both cases.

[Swan Red]

This is the update I got today with the details of a report into the effectiveness of cash grants

 

Last week, one of the first experimental studies to tackle this question head-on was formally released, and the results are striking. First, it found that cash grants to the "ultra-poor" doubled their earnings and likelihood of owning a business. Second, it found that while other more traditional add-ons - like supervision and advice for the entrepreneurs - also increased profits, they were much less effective per dollar than the grants themselves. That underscores a key point: it's not just about whether traditional aid programs are helping, but whether they are doing more good than the poor could do themselves with the same money.

 

The Returns to Cash and Microenterprise Support Among the Ultra-Poor: A Field Experiment

[KBR]

Slightly diverting off topic...

 

Saw this film the other night - highlighted the plight of farmers in India and the causes of suicide.

 

Natha and Bhudha, two farmers from Peepli village in the heart of rural India are about to lose his plot of land due to an unpaid government loan. A quick fix to the problem is the very same government's program that aids the families of indebted farmers who have committed suicide. As a means of survival Natha can choose to die! His brother is happy to push him towards this unique 'honor' but Natha is reluctant. Local elections are around the corner and what might've been another unnoticed event turns into a 'cause celebré' with everyone wanting a piece of the action. Political bigwigs, high-ranking bureaucrats, local henchmen and the ever-zealous media descend upon sleepy Peepli to stake their claim. The question on everyone's lips: "Will he or Won't he?" As the mania escalates over what will be the fate of farmer Natha, nobody seems to care how he feels about his choice. (In Hindi with English Subtitles)