Is poverty self-perpetuating?


Published 07.08.19
Photo credit:
M. Yousuf Tushar

A cash transfer experiment in Bangladesh targeting the ultra-poor reveals that complementary assets are key in escaping poverty

Why do people stay poor? Maitreesh Ghatak discusses the implications of a randomised control trial in Bangladesh, where some ultra-poor women who received a capital grant managed to escape poverty while others did not. In such interventions, the quantity of capital is key (sufficient to buy a cow, for example) but complementary assets, such as a way to store milk and transport it to market, are also needed to take advantage of the transfer and rise above the critical threshold for escaping poverty. To make a long-term difference to the problem of poverty, saving a bit at a time will not be enough – a more substantial and sustained effort is required.