A microfinance organization in Paraguay has developed the “Poverty Stoplight” (PS), an innovative technological tool that allows families to self-assess their level of multidimensional poverty and start an integrated mentoring process whose goal is to empower families to eliminate multidimensional poverty based on what the participants value the most. During the program, a mentor works with participants to design a customized family plan to identify their most significant challenges in order to overcome their deprivations. The PS places human development and poverty elimination as the main objectives for the intervention. This paper has three elements. First, it presents the methodology for poverty intervention and the detailed tool (i.e. a multidimensional metric) used to encourage reflecting and promoting agency. Second, it uses the Capability Approach to explore the potential of the PS intervention to increase agency and decrease multidimensional deprivations. Third, it presents results from an ongoing research project that evaluates the program’s effectiveness in helping participants overcome poverty. This empirical part is based on data collected between August 2015 and June 2017 from over 9,000 microfinance clients and analyzed using the technique of OLS regressions. The results indicate that participation in the program is indeed associated with a higher probability of overcoming multidimensional poverty.
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