Economies of scale of large-scale international development interventions: Evidence from self-help groups in India

Livelihoods and microfinance programs for women often show reduced impacts after scale-up. Yet, program scale-up may reduce average per capita costs and maintain cost-effectiveness despite lower impact. This paper presents evidence on the association between program scale, costs, and cost-effectiveness by analyzing how the costs of a large-scale Self-Help Group (SHG) program in India changed from its inception in 2007 to its scale-up in 2019. We use expenditure data from program’s audit statements of Jeevika – the Bihar Rural Livelihoods Promotion Society – and find that a 1% increase in program membership was associated with a 0.6% increase in annual program expenditures, indicating large economies of scale. Predicted costs from regressions suggest that the annual per capita program expenditures declined from $29 when the program covered 100,000 members to $5 when it reached 10 million members. Previous impact evaluations of Jeevika showed sizeable but smaller substitutions away from high-cost debt after scale-up than during the pilot, but we found that economies of scale led to similar cost-effectiveness ratios for this outcome. We also found that formation of higher-level federations is associated with lower marginal costs than setting up SHGs. However, previous evidence suggests that Jeevika did not generate average impacts on women’s agency and asset ownership after scale-up. Building on a rich history of research on Jeevika, we argue that program implementers must identify key success factors in pilot programs to minimize tradeoffs between cost savings and potentially reduced impacts after scale-up. Further, we suggest investments in linking SHGs to federations to improve the cost-effectiveness of SHGs.