Category: Poverty

Does International Child Sponsorship Work?

We have all seen the commercials on television. Many of them readily fall under the broad name of “poverty porn,” and most of them feature resigned-looking developing-world children set against a sad soundtrack. All of them ask us to help by sponsoring a child in a developing country.

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But does international child sponsorship work? In a new article (older, ungated copy here) in the Journal of Political Economy, Bruce Wydick, Paul Glewwe, and Laine Rutledge give an answer that is bound to surprise many development cynics:

Child sponsorship is a leading form of direct aid from wealthy country households to children in developing countries. Over 9 million children are supported through international sponsorship organizations. Using data from six countries, we estimate impacts on several outcomes from sponsorship through Compassion International, a leading child sponsorship organization. To identify program effects, we utilize an age-eligibility rule implemented when programs began in new villages. We find large, statistically significant impacts on years of schooling; primary, secondary, and tertiary school completion; and the probability and quality of employment. Early evidence suggests that these impacts are due, in part, to increases in children’s aspirations.

Sen on Famine (and a Reflection on Hunger)

In a situation of direct entitlement failure, food availability in shops may not go down very much even when total food availability sharply goes down. When during the Irish famine in late 1846, people were starving, Major Parker, the local Relief Inspector sent the following report on December 21st from Skibbereen: “On Saturday, notwithstanding all this distress, there was a market plentifully supplied with meat, bread, fish, in short everything. Similar reports from all over Ireland made Trevelyan insist that all the “resources” of the country should be, as he put it, “drawn out.” In fact, however, the apparently paradoxical situation had arisen from a decline in entitlement in excess of the supply of food. That situation is, in fact, quite a common occurrence in famines. What has to be guaranteed to prevent starvation is not food availability but food entitlement.

That’s 1998 Nobel laureate for economics Amartya Sen, in an 1980 essay in World Development titled “Famines,” which I assigned as a reading in my food policy seminar. Continue reading

The Demand for Food of Poor Urban Households in Mexico

A cool new article in the American Economic Journal: Economic Policy by Manuela Angelucci and Orazio Attanasio:

We use Oportunidades, a conditional cash transfer to women, to show that standard demand models do not represent the sample’s behavior: Oportunidades increases eligible households’ food budget shares, despite food being a necessity; demand for food and high-protein food changes over time only in treatment areas; the treatment effects on food and high-protein food consumption are larger than the prediction from the Engel curves at baseline; and the curves do not change in eligible households with high baseline bargaining power for the transfer recipient. Thus, handing transfers to women is a likely determinant of the observed nutritional changes.

Some of this might be a bit too technical for non-economists, so let’s take a closer look at their findings: Continue reading

How and When Is Poverty Transmitted from One Generation to the Next?

That’s the theme of a special issue of the Development Policy Review, published last month. The special issue contains papers on:

  1. Widowhood and asset inheritance in Sub-Saharan Africa, by Amber Peterman,
  2. How inheritance is a gendered and intergenerational dimension of poverty, by Elizabeth Cooper and Kate Bird,
  3. Inheritance practices and gender differences affect poverty and well-being in Ethiopia, by Neha Kumar and Agnes Quisumbing,
  4. Women, marriage, and asset inheritance in Uganda, by Cheryl Doss et al.,
  5. Intergenerational poverty traps in India, by my Sanford School colleague Anirudh Krishna, and
  6. Women and inheritance in Sub-Saharan Africa, by Elizabeth Cooper.

This is a very important topic considering that up until recently, we did not have good datasets tracking people over time. We had even fewer datasets tracking people and their children over time.

Payday Loans and Microfinance

Consider the fuss that people now make about microcredit — small loans, often at interest rates well above 50 per cent a year that are said to help the very poorest families manage their finances and even become entrepreneurs. That’s a story that many people are happy to accept without examining the evidence, while at the same time condemning payday loans, which appear to be a similar product. Are you sure [that’s] not just reflecting a prejudice that credit-starved Bangladeshis are heroic would-be entrepreneurs while credit-starved westerners must be trailer trash?

That’s Tim Harford, in a post on whether payday lending is wrong.

Each fall, when I teach the students in my development seminar about credit rationing, I tell them “If you think credit rationing is a developing-country phenomenon, think again.” I then encourage them to drive up North Roxboro Street north of I-85 to see how the market responds to failures of the credit market in Durham.