Determine the Upfront Endowment Needed to Sustain Poverty Reduction

Determine whether an upfront outlay can be sufficient to achieve a specified poverty-reduction goal on a lasting basis, rather than financing the transfers through recurring annual flows.

Background

The paper estimates the annual flow cost of reducing extreme poverty through targeted transfers. It raises the related issue of whether poverty reduction could instead be sustained through a one-time endowment or other upfront expenditure. The answer depends on assumptions about rates of return and may also involve front-loading transfers to households so that recipients can invest in opportunities with higher returns than those available to endowment managers.

The problem remains unresolved because poverty is volatile and households may move across the poverty line over time, making the appropriate transfer amount household- and time-dependent. Changes over time in the relationship between consumption and proxy-means-test covariates further complicate the design of a lasting policy.

References

Another natural and related question is whether there is some upfront outlay that would be sufficient to achieve a given poverty goal on a lasting basis, as opposed to the flow-cost approach we have taken here.

— What Would it Cost to End Extreme Poverty?  (2609.02013 - Sahoo et al., 2 Sep 2026) in Section 6, Discussion & Implications