The Challenge: People find it hard to save, yet available alternatives can be costly and inefficient
Research over the last decade has shown that while the poor do have disposable income, they don’t save as much as they could. And while many express a desire to save more, when the time comes, they find it difficult to do so. Furthermore, there is evidence that even among very poor people there is a demand for savings services and, in the absence of appropriate products and services, people instead turn to costly and less efficient alternatives. The inability to save can lead to borrowing at much higher rates for predictable expenses, making the poor significantly more constrained.
Karlan and Appel combine behavioral economics with worldwide field research that takes them into villages across Africa, India, South America, and the Philippines, where economic theory collides with real life.