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Does Solving Energy Poverty Help Solve Poverty? Not Quite


Recent research questions a widely held belief.

The head of Swedfund, the development finance group, recently summarized a widely-held belief: “Access to reliable electricity drives development and is essential for job creation, women’s empowerment and combating poverty.” This view has been the driving force behind a number of efforts to provide electricity to the 1.1 billion people around the world living in energy poverty.

But does electricity really help lift households out of poverty? We set out to answer this question. We designed an experiment in which we first identified a sample of “under grid” households in Western Kenya—structures that were located close to but not connected to a grid. These households were then randomly divided into treatment and control groups. In the treatment group, we worked closely with the rural electrification agency to connect the households to the grid for free or at various discounts.

In the control group, we made no changes. After eighteen months, we surveyed people from both groups and collected data on an assortment of outcomes, including whether they were employed outside of subsistence agriculture (the most common type of work in the region) and how many assets they owned. We even gave children basic tests, as a frequent assertion is that electricity helps children perform better in school since they are able to study at night.

When we analyzed the data, we found no differences between the treatment and control groups. The rural electrification agency had spent more than $1,000 to connect each household. Yet eighteen months later, the households we connected seemed to be no better off. Even the children’s test scores were more or less the same.

The results of our experiment were discouraging, and at odds with the popular view that supplying households with access to electricity will drive economic development. Lifting people out of poverty may require a more comprehensive approach to ensure that electricity is not only affordable, but is also reliable, useable, and available to the whole community, paired with other important investments.

For instance, in many low-income countries, the grid has frequent blackouts and maintenance problems, making electricity unreliable. Even if the grid were reliable, poor households may not be able to afford the appliances that would allow for more than just lighting and cell phone charging. In our data, households barely bought any appliances and they used just 3 kilowatt-hours per month. Compare that to the U.S. average of 900 kilowatt-hours per month.

There are also other factors to consider. After all, correlation does not equal causation. There is no doubt that the 1.1 billion people without power are the world’s poorest citizens. But this is not the only challenge they face. The poor may also lack running water, basic sanitation, consistent food supplies, quality education, sufficient health care, political influence, and a host of other factors that may be harder to measure but are no less important to well-being.

Prioritizing investments in some of these other factors may lead to higher immediate returns. Previous work by one of us (Miguel), for example, shows substantial economic gains from government spending on treatment for intestinal worms in children.

It’s possible that our results don’t generalize. They certainly don’t apply to enhancing electricity services for non-residential customers, like factories, hospitals, and schools. Perhaps the households we studied in Western Kenya are particularly poor (although measures of well-being suggest they are comparable to rural households across Sub-Saharan Africa) or politically disenfranchised.

Perhaps if we had waited longer, or if we had electrified an entire region, the household impacts we measured would have been much greater. But others who have studied this question have found similar results. One study, also conducted in Western Kenya, found that subsidizing solar lamps helped families save on kerosene, but did not lead children to study more. Another study found that installing solar-powered microgrids in Indian villages resulted in no socioeconomic benefits.

Nairobi at night. Image licensed under Creative Commons.

Addressing the needs of the world’s poorest citizens is clearly important, and those of us who enjoy 24/7 electricity cannot imagine a life without it. But in a world of limited resources, we need to be focused on the best ways to address poverty. The emerging evidence suggests that electrifying poor, rural households may not be the essential key that we once thought it was. While energy access is potentially valuable, solving poverty will take a whole lot more.

This post is co-authored with Kenneth Lee and Edward Miguel.

Energy Institute at HaaS

5 Comments on "Does Solving Energy Poverty Help Solve Poverty? Not Quite"

  1. Hello on Tue, 13th Mar 2018 10:53 am 

    >>>> After eighteen months, we surveyed people from both groups and collected data

    That’s way not long enough. Providing electricity is a life/culture changing thing. It will take years, probably a whole generation to see the changes it provokes.

    I assume the main use of elecricity once it was installed was for pleasure (TV/cellphone/refrigerator etc). Electricity must be used for production to make an impact.

  2. dave thompson on Tue, 13th Mar 2018 12:07 pm 

    To many people(world over population) going after less and less basic resources, food shelter clothing, mix in multinational corporate rule, and vol-la, instant poverty for the masses.

  3. Anonymouse1 on Tue, 13th Mar 2018 12:55 pm 

    This is an interesting article. I have long maintained that the entire ‘energy poverty trope’ is basically a con job. It is about selling product, and creating ‘new’ consumers to tie to grids devices and ‘services’ (creating dependency). Like much of the so called ‘charity’ work the west engages in, a lot of it has a wonderful, often humanitarian overt sounding purpose and names to match, and a covert purpose(the actual goal). This is true from fairly straightforward things like food relief, all the way up to ‘Humanitarian interventions’ and regime-changing’ (aka military invasions and resource grabs).

    The experiment is interesting on several levels. One would (think), that going from no power at all, to a powered life-style, would be such a major transformational change, that results should be easily observed by their experiment. That such changes did not occur, is telling. Even though they admit their experiment may not be perfect, it is still is telling us something. Namely, that the lofty goals of solving ‘energy poverty’ in reality have little to do with solving actual poverty. These are not the same thing, but it is easy conflate the two, which what its advocates always do on this topic.

    If you need further proof, look to the ‘advanced’ west, and is less developed backwaters like the united snakes of amerika. The energy hogs (haves), that use far too much energy, have plenty of poverty, ignorance and illnesses of all descriptions(esp. mental ones) in their societies. This occurs despite all the energy they could ever possibly want or need.

    In none of this is enough, just look to history. Artificial power is a recent thing, and we have had plenty of of wealthy societies(think Rome or China) in the past where NO power, beyond animal, muscle or solar power was available. They were wealthy, complex societies with not one watt of AC\DC. There was also, surprise, poverty as well.

    IoW, rescuing people from ‘energy poverty’ is a con job, in much the same way that amerikan ‘humanitarian interventions’ are cons.

  4. rockman on Tue, 13th Mar 2018 5:37 pm 

    Had not thought about it before but just the opposite seems true: a growing and vibrant economy will have the resources to bring about electrification (and public services, mass transit, etc). The resources and requirement.

  5. Go Speed Racer on Tue, 13th Mar 2018 9:27 pm 

    They are poor because they want to be poor.
    So giving them stuff won’t change their situation.

    Any republican could tell U that.

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