A multifaceted poverty reduction program has economic and behavioral consequences.

Area of Science:

• Behavioral Economics
• Development Economics
• Social Psychology

Background:

• Understanding the behavioral effects of poverty alleviation is crucial for effective policy.
• Social preferences, such as fairness and efficiency, can influence economic decision-making.
• Previous research has not fully explored the causal link between poverty reduction and shifts in social preferences.

Purpose of the Study:

• To investigate the causal impact of a multifaceted poverty reduction intervention on the social preferences of recipients.
• To analyze both the economic and behavioral consequences of the intervention.
• To contribute to a broader understanding of how poverty alleviation affects individual decision-making.

Main Methods:

• Utilized a fuzzy regression discontinuity design based on program eligibility criteria.
• Conducted a lab-in-the-field experiment five years post-intervention to measure distributional preferences.
• Combined administrative census data with experimental data to analyze outcomes.

Main Results:

• The intervention causally increased household income by 50% five years later.
• Household heads showed increased consistency with utility maximization and a greater preference for efficiency.
• Selfishness decreased, while equality preference remained unchanged.

Conclusions:

• Poverty reduction interventions can have significant causal effects on social preferences, beyond purely economic gains.
• The findings suggest that interventions can foster preferences aligned with economic rationality and efficiency.
• A comprehensive evaluation of poverty reduction programs should consider their impact on social and behavioral outcomes.