Many policies attempt to help extremely poor households build sustainable sources of income. Although economic interventions have predominated historically^1,2, psychosocial support has attracted substantial interest^3,4,5, particularly for its potential cost-effectiveness. Recent evidence has shown that multi-faceted ‘graduation’ programmes can succeed in generating sustained changes^6,7. Here the researchers show that a multi-faceted intervention can open pathways out of extreme poverty by relaxing capital and psychosocial constraints. The researchers conducted a four-arm randomized evaluation among extremely poor female beneficiaries already enrolled in a national cash transfer government programme in Niger. The three treatment arms included group savings promotion, coaching and entrepreneurship training, and then added either a lump-sum cash grant, psychosocial interventions, or both the cash grant and psychosocial interventions. All three arms generated positive effects on economic outcomes and psychosocial well-being, but there were notable differences in the pathways and the timing of effects. Overall, the arms with psychosocial interventions were the most cost-effective, highlighting the value of including well-designed psychosocial components in government-led multi-faceted interventions for the extreme poor.

¹ Fiszbein, A. et al. Conditional Cash Transfers: Reducing Present and Future Poverty (World Bank, 2009).

² Banerjee, A., Karlan, D. & Zinman, J. Six randomized evaluations of microcredit: introduction and further steps. Am. Econ. J. Appl. Econ. 7, 1–21 (2015).

³ Ridley, M., Rao, G., Schilbach, F. & Patel, V. Poverty, depression, and anxiety: causal evidence and mechanisms. Science 370, eaay0214 (2020).

⁴ Haushofer, J., Mudida, R. & Shapiro J. P. The Comparative Impact of Cash Transfers and a Psychotherapy Program on Psychological and Economic Well-Being. Working Paper no. 28106 (NBER, 2020).

⁵ Lund, C. et al. Poverty and mental disorders: breaking the cycle in low-income and middle-income countries. Lancet 378, 1502–1514 (2011).

⁶ Banerjee, A. et al. A multifaceted program causes lasting progress for the very poor: evidence from six countries. Science 348, 1260799 (2015).

⁷ Bandiera, O. et al. Labor markets and poverty in village economies. Q. J. Econ. 132, 811–870 (2017).