Psychosocial Constraints and Spillovers in a Multifaceted Poverty Graduation Program in Kenya

14.04.2025 14:15 – 15:30

IEE SEMINAR

(jointly with Nathaniel Jensen, Geyi Zheng, and Laurel Krovetz)

ABSTRACT

Poverty reduction programs modeled on BRAC’s graduation approach build up both tangible productive assets and intangible psychosocial assets such as self-confidence and aspirations for upward mobility. The goal of this paper is to better understand how psychosocial factors operate and shape the impact of graduation programs. The paper first uses a dynamic optimization model of occupational choice to derive nuanced insights about how such programs might work and for whom. It then employs a randomized controlled trial of a graduation program implemented in the pastoralist regions of Northern Kenya to test these insights. We find that the average treatment effects, while highly favorable, disguise substantial heterogeneity. Beneficiaries with severe depressive symptoms at baseline gained little from the program. We also provide evidence that the program works in part by changing preferences and increasing the desire for economic advancement. Moreover, a saturation design allows us to identify spillover effects of the program onto the untreated. We find that control populations change both their preferences and their investment behaviors in ways that are similar to the impacts of program participants. The paper draws out two implications of these findings for the cost-effective design and implementation of graduation programs intended to help families exit chronic poverty.

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