03 February 2012

The economics of livelihoods

I'm not really sure what "livelihoods" means, except that I know that NGOs talk about it a lot, and that it seems to have something to do with helping poor people to generate more income. In fact NGOs seem to spend a lot of time and money trying to help poor people to improve their livelihoods, or generate more income. Now, how people generate their income sounds a lot like the kind of problem that economics was designed to deal with. In fact, a naive observer might have guessed that the whole point of micro development economics was to apply theory and evidence to the question of how poor people generate their income, and what interventions can do to improve matters. Which might have led you to expect a voluminous literature on the economics of livelihoods.

A google search for "the economics of livelihoods" gets you 51 results. "The economics of livelihoods approaches" get you zero. Now, I think this is probably just an issue of terminology. Is this an unexploited niche for economists to influence policy just by speaking NGO language?


Chris Prottas said...

This is a good point. Working on livelihood programs now, I'd also be curious to see how economists would design surveys to best capture the performance of livelihood programs. In my opinion, livelihoods distinguish themselves from microenterprises by the fact that they are often seasonal, with significant variations in the investment of a person's time, and are generally combined in a way to provide multiple sources of income to the same individual (or household). This presents some interesting M&E challenges, though it would be great to have more well-funded academic research into the issue.

As a bit of a tangent, I think one issue with academic analysis of the 'impact' of microenterprise/livelihood interventions is that implementation is so key. For example, Trickle Up (where I work) is part of the CGAP/Ford Foundation graduation program, with 10 pilots all providing a similar BRAC-based model to help the ultra poor develop sustainable livelihoods (buzzword bingo!).  There are some RCTs underway and initial results appearing. The early results show very disparate outcomes between the different programs. For one program the impact was indistinguishable from zero. For another, the impacts look pretty good. Last summer's impact evaluation from BRAC itself looks very good.

I think this variation is real and if we did a larger study with multiple partners and programs I think we'd find that the majority of the variation in program impact was at the partner and program level. The details simply matter too much. To put it another way, the generalizability or external validity of the research results I think is very limited.   While integrating data on the implementation can be difficult, I think it would very helpful.  More broadly, it's unfortunate that the results of academic research (the fact that they are RCTs is relevant only because they will be held in higher regard) of organizations that are implementing a program for the ultra poor for the first time will be considered by many as indicative of the impact of ultra poor livelihood programs, writ large.  There will be limited information to frame a conversation of why programs work or don't work: details about the characteristics of the social and economic barriers facing the program participants (i.e., are they the 'ultra poor'?), what determined the program design (budget cuts?), the technical skill level of the field techs, the quality of implementation, the sources of 'leakage', etc.

Anyhow, let me add a vote to more research into livelihood development in general. 

Cyrus said...

Agree. I faced this when doing dissertation research to study the impact of a reintegration program that sought to provide "sustainable livelihoods" to demobilized soldiers. The development economics literature had almost nothing to say about this theme. So what we did was to translate the claims from the policy literature into a set of assumptions and claims informed by basic microeconomic principles---kind of like what Casey et al. do in their Sierra Leone CDD paper. I was nonetheless struck by how a concept, "sustainable livelihoods", which is so widely used in development policy programming has received almost zero scrutiny in the academic literature. Talk about a gulf between ivory tower and real world policy making.

rovingbandit said...

Definitely looking forward to the results of all those graduation evaluations (IPA - yeah! 
http://www.poverty-action.org/ultrapoor), and hopefully also the qualitative evaluations being done by IPA and BRAC will shed some light on some of those crucial process issues. Would definitely be great to see more 10-country replication RCT studies like this!

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