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A bus ticket as a financial instrument

In rural Bangladesh and India, seasonal poverty persists because families cannot afford the bus fare to a city where work exists. An RCT showed that a small travel subsidy makes a large difference.

In this post
  1. The intervention
  2. What the data showed
  3. The politics of a bus ticket
  4. Where this sits

Every year, between planting and harvest, rural households in South Asia go through a period of acute poverty. The crops are in the ground and not yet ready, and there is no farm work. Families eat less, borrow more and take children out of school. Development economists call this the “lean season”. The families living through it call it hunger.

For many of these households, seasonal migration to a nearby city would solve the problem. Construction sites, rickshaw pulling and domestic work all need labour, and the family knows this. The city is a bus ride away. But the fare, together with a few days of meals before the first wage arrives, has to come from savings the household does not have.

The programme was designed to test what happens when that cost is covered.

The intervention

The design was simple. Randomly selected households received a small travel subsidy during the lean season, enough to cover the bus fare and a few days of meals. The subsidy was meant to get households past a shortage of cash at one specific moment, and it was not intended as charity. The hypothesis was that if the fare is the barrier, covering it will lead to migration, and the wages and remittances from migration will more than repay the cost of the subsidy.

The programme was designed with development economists and first tested as a randomised controlled trial in Rangpur, in northern Bangladesh, in the lean season of 2008. Randomisation was at the village level, so whole villages were assigned either to receive the offer or to serve as controls (Bryan, Chowdhury and Mobarak, Econometrica, 2014).

What the data showed

The results were striking. Households that received the subsidy were significantly more likely to send a migrant to the city during the lean season. The migrants earned wages and sent money home. Household consumption, the standard proxy for welfare, rose measurably during the hungry months.

The programme was also very cost-effective. The subsidy was small, roughly a bus ticket and a few days of food, and the increase in household consumption was several times the subsidy amount. By the standards of development interventions, that is a high return for the money spent.

The effect also lasted. Some households that received the subsidy in the first year kept migrating in later years without it. Once a household had made the first trip, knew the route, knew where to find work and had a contact in the city, it kept going on its own.

The politics of a bus ticket

The intervention raises a question that development economics does not ask often enough. If a bus ticket can relieve seasonal hunger, why does seasonal hunger persist?

The reasons are structural. Rural households in seasonal poverty lack savings, access to credit and sometimes the networks that would tell them where work is, so they cannot finance even a short migration. Microfinance products are designed for lending to enterprises and do not cover a bus fare. Government welfare programmes run on annual cycles and do not follow the seasons. The months between planting and harvest fall into a gap in the institutions meant to reduce poverty.

The programme showed that this gap can be closed cheaply and effectively. Why it has not been closed at scale is a political question. The evidence exists, the cost is low and the returns are high, and what is missing is a policy decision to act on it.

Where this sits

We were involved in designing the programme and in running it. The experience shaped how we think about two things. Simple ideas still need rigorous testing: a bus ticket is not a complex intervention, but the RCT was needed to prove the case. And it is frustrating to watch strong evidence go unused because the policy opportunity never comes.

The Measurement Checklist asks who will act on the report. For this programme the evidence was compelling, and the actor it needs, a government willing to fund seasonal migration subsidies at scale, has been slower to arrive than the evidence deserved.

Written in New Delhi. If you find a mistake or want to write in, email info@idealog.works.

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