Do Self-Help Groups Work on Achieving Economic Goals? New Evidence from a Field Experiment in Medellin, Colombia

Abstract: This research is the first study to introduce an experimental setting to test the implication of a poverty alleviation model inspired by the Family Independence Initiative (FII) in a developing country. The FII is a poverty alleviation approach that has shown remarkable results in improving the living conditions of low-income individuals in three cities of the United States. It promotes self-improvement through setting goals, incentive schemes, and self-help groups (SHGs). The results suggest that the FII model can be successfully implemented as a poverty alleviation policy in a developing country. The model does have a positive and significant effect on debt reduction, savings, as well as business performance. The most effective components of the model are the goal and incentive treatments; meanwhile, SHGs present a negative effect on goal achievement, a poor effect on business outcomes, but a positive and significant effect on social ties