En Colombia, así como en muchos otros países, los trabajadores enfrentan muchas barreras para ahorrar para la jubilación. La situación es mucho peor para los trabajadores informales, que representan alrededor del 65 por ciento de la fuerza laboral total en Colombia. Con el fin de investigar formas de aumentar las contribuciones voluntarias para el retiro, Innovations for Poverty Action en colaboración con Colpensiones, el administrador público del Régimen de Prima Media con Prestación Definida, y el Banco Interamericano de Desarrollo llevará a cabo tres etapas de evaluaciones aleatorias rápidas - RFT (Rapid Fire Testing) que medirán el impacto de los mensajes de texto en los hábitos de ahorro para el retiro. En México, de forma paralela, los investigadores están implementando un estudio similar adaptado al contexto nacional.
We evaluate an intervention to raise young women’s economic empowerment in Sierra Leone, where women frequently experience sexual violence and face multiple economic disadvantages. The intervention provides them with a protective space (a club) where they can …nd support, receive information on health/reproductive issues and vocational training. Unexpectedly, the post-baseline period coincided with the 2014 Ebola outbreak. Our analysis leverages quasi-random across-village variation in the severity of Ebola-related disruption, and random assignment of villages to the intervention to document the impact of the Ebola outbreak on the economic lives of 4 700 women tracked over the crisis, and any ameliorating role played by the intervention. In highly disrupted control villages, the crisis leads younger girls to spend signi…cantly more time with men, out-of-wedlock pregnancies rise, and as a result, they experience a persistent 16pp drop in school enrolment post-crisis. These adverse e¤ects are almost entirely reversed in treated villages because the intervention enables young girls to allocate time away from men, preventing out-of-wedlock pregnancies and enabling them to re-enrol in school post-crisis. In treated villages, the unavailability of young women leads some older girls to use transactional sex as a coping strategy. The intervention causes them to increase contraceptive use so this does not translate into higher fertility. Our analysis pinpoints the mechanisms through which the severity of the aggregate shock impacts the economic lives of young women, and shows how interventions in times of crisis can interlink outcomes across younger and older cohorts. J
In Rwanda, we have continued our global tradition of rigorous, applicable research by building foundational research capacity and conducting evaluations in areas of pressing national concern. Examples of our work below offer promising insights into everyday issues that affect the lives of the Rwandan poor.
Commitment products can remedy self-control problems. However, imperfect knowledge about their preferences may (discontinuously) lead individuals to select into incentive-incompatible commitments, which reduce their welfare. I conduct a field experiment where low-income individuals were randomly offered a new installment-savings commitment account. Individuals chose a personalized savings plan and a default penalty themselves. A majority appears to choose a harmful contract: While the average effect on bank savings is large, 55 percent of clients default, and incur monetary losses. A possible explanation is that the chosen penalties were too low (the commitment was too weak) to overcome clients’ self-control problems. Measures of sophisticated hyperbolic discounting correlate negatively with take-up and default, and positively with penalty choices – consistent with theoretical predictions that partial sophisticates adopt weak commitments and then default, while full sophisticates are more cautious about committing, but better able to choose incentive-compatible contracts.
In Mexico, we have continued our global tradition of rigorous, applicable research by building foundational research capacity and conducting evaluations in areas of pressing national concern. Examples of our work detailed in this brief promising insights into everyday issues that affect the lives of people in Mexico.
Limited financial knowledge, skills, and confidence are associated with suboptimal financial behavior such as low rates of saving, limited usage of deposit and transactional accounts, and overindebtedness. The Government of Rwanda, the World Bank Group, and Innovations for Poverty Action (IPA) partnered to conduct a large-scale randomized evaluation that measured the impact of Phase One of the Financial Education through SACCOs program. The evaluation measured and compared the impacts of two program delivery models—autonomous vs. fixed trainer selection—on SACCO members’ financial knowledge, skills, attitudes, and behaviors.
- SACCO members attended more sessions of the Financial Education through SACCOs when SACCOs had autonomy to choose trainers from the local community (“autonomous selection”).
- SACCO members in this autonomous selection group showed improvements in financial knowledge, attitudes, and behaviors, including with respect to knowledge of key rules of thumb, attitudes that emphasize saving and responsible borrowing, and having—and strictly adhering to—a written budget and financial plan.
- They were also more likely to report saving regularly towards financial goals, and to deposit savings in the SACCO.
- However, when trainer profiles were predetermined and limited to individuals with formal roles at the SACCO (“fixed trainer selection”) these improvements were not observed. No improvements in either group were found on account usage, borrowing behavior, or financial security.
Female labor force participation varies significantly even among countries with similar levels of economic development. Recent studies have shown that gender norms can help explain these differences in women's work, but the channels through which norms impact women's employment decisions are not well understood. We present novel data on spouses' preferences and perceptions of community attitudes about female labor in rural India and document associations with female work. We find that the perceived social cost of women's work falls on men and that husbands' opposition to female labor is associated with their wives' lower take-up of employment.
We present findings from a pilot study exploring whether and how existing ties between urban migrants and rural farmers may be used to provide the latter improved access to formal insurance. Urban migrants in Ouagadougou (the capital of Burkina Faso) originating from nearby villages were offered, at the prevailing market price, a rainfall index insurance product that can potentially protect their rural relatives from adverse weather shocks. The product had an uptake of 22% during the two-week subscription window. Uptake rates were higher by 17-22 ppts among urban migrants who were randomly offered an insurance policy that would make pay-outs directly to the intended beneficiary rather than the subscriber. We argue that rainfall index insurance can complement informal risk-sharing networks by mitigating problems of informational asymmetry and self-control issues.
We report results of a randomized control trial in which parents of primary school leavers were encouraged to open a convenient bank account operated over a mobile money platform. A lock savings account (LSA) was randomly promoted to half the treatment group. Treatment boosted account take-up by 25 percentage points. Intent-to-treat estimates show that being offered either account increased savings on the mobile phone. Total financial savings increased by 3-4 times, suggesting access to the mobile bank account crowded in other forms of savings. High school enrollment was 5-6 percentage points higher – representing a one third increase for compliers.
IPA Zambia is pleased to share its final bulletin from 2017. This bulletin features updates from our Saving for Safe Delivery study and the scale-ups of the food constraints and Catch Up projects. This bulletin also highlights IPA Zambia's dissemination events for the "Making Ghanaian Girls Great!" and "Interpersonal Communication to Encourage Use of Female Condoms in Zambia" studies.
Bank accounts can provide a secure way for low-income households to build their assets to make large investments or protect themselves against unforeseen expenses. Yet many poor households don’t use formal financial services. In the Dominican Republic, Banco Unión delivers remittances to approximately 400,000 clients who do not have a formal bank account. The bank also created two savings products tailored to the needs of these clients. In partnership with the Inter-American Development Bank (IDB) and Innovations for Poverty Action (IPA), Banco Unión developed SMS message campaigns to try to boost account uptake and usage among its remittance-receiving clientele. Two randomized evaluations found that the messaging campaigns did not increase clients’ use of formal bank accounts, and may have in fact discouraged account holders’ engagement with Banco Unión, as observed through decreased deposit and withdrawal activity and slightly lower balances by the end of the campaigns. There are several possible explanations for this behavior, including a desire for privacy, savings goals that were overly ambitious, or the use of other, unmonitored deposit products.
In Burkina Faso, Côte d'Ivoire, and Mali, we have continued our global tradition of rigorous, applicable research by building foundational research capacity and conducting evaluations in areas of pressing national concern. Examples of our work below offer promising insights into everyday issues that affect the lives of the Francophone West African poor.
An audit study was conducted in Colombia following the protocols in Giné and Mazer (2017). Trained auditors visited multiple financial institutions, seeking credit and savings products. Consistent with Gabaix and Laibson (2006) and similar to Giné and Mazer (2017), the staff only provided information about the cost when asked, disclosing less than a third of the total cost voluntarily. In addition, clients were rarely offered the cheapest product, most likely because staff was incentivized to offer more expensive and thus more profitable products to the institution.
Climate change-induced natural disasters affect an estimated 230 million people worldwide. Droughts, flooding, pollution, and other weather events are especially threatening in developing countries, which have limited capacity to cope. Within those countries, the poor and marginalized are the most vulnerable, since climate change makes food more expensive, poses health risks through waterborne disease and extreme weather (particularly in areas with poor infrastructure and sanitation), and limits farmers’ ability to create and maintain sustainable livelihoods.
The poor are inadequately equipped to cope with income shocks that accompany extreme weather conditions. A study in India found that while farmers adjusted to weather fluctuations (in this case monsoons) by changing irrigation and crop choices, they only recovered 15% of profits lost. Substantial financial barriers may prevent farmers from adapting effectively to harmful impacts of climate change. For example, farmers may not have capital or credit available to invest in more resilient seeds or technology like irrigation. Additionally, they might not have access to affordable insurance products that can mitigate losses caused by extreme weather patterns.
As the effects of climate change intensify, it is critical to help the poor adapt to climate-induced challenges and empower them to reduce their impact on the environment. At IPA’s Financial Inclusion Program (FIP), we are discovering new ways that financial services and products can address the risks that climate change poses for the poor.