There’s been a seeming lot of discussion lately about the non-traditional savings habits of the poor, what with Portfolios of the Poor coming out, and I recently saw another interesting document on product-specific savings plans in India. Women (usually) may sign up with a store to save towards the purchase of a specific product, and may be rewarded with an extra several percentage discount at the end – the original installment plan (although they don’t get to take the product home first!). The shortcomings of this plan are that the money is non-fungible (i.e. can’t be later withdrawn to pay for a different product), and that there’s no guarantee that the price of the product won’t rise over the course of the saving period, forcing the client to save more than originally expected. However, a number of clients also identified the social pressure to complete their savings and make the purchase as a valuable incentive to continue saving, which they wouldn’t have had with a formal savings account. This echoes the findings of other studies of non-monetary rewards for savings, and could be an interesting concept around which to design new savings schemes.
I’ve seen some interestingly conflicting reports lately on the impacts of microfinance upon education. Someone directed me to one which showed that microcredit clients were more likely to pull their children out of school to do the domestic work which parents gave up in order to run their microcredit-supported businesses, but I’ve also seen another which found that the children of microcredit clients were actually more likely to be in school, as their parents could more easily pay their school fees. I can think of several different ways in which these elements of small businesses, children’s labor, and schooling could interact:
- Maybe the parents who pulled their children out of school to cope with successful businesses worked far from their homes and didn’t have the time to handle both business and domestic work, while successful clients whose children stayed in school worked closer to home and were more easily able to balance the two.
- Perhaps there’s some sort of U-shaped curve of parental income (as supported by microcredit) and the likelihood of children’s schooling. Parents who are suddenly busier with work than previously, but are still too poor to afford to hire domestic help, may be the ones more likely to pull their children out of school – the low point of the U. Parents whose businesses are quite successful, on the other hand, might better be able to pay for both domestic help and school fees.
- This is probably also correlated with whether parents were successfully able to repay their loans. There must be some exogenous shocks to parental earnings that affect both their ability to repay their loans and their financial capacity to send their kids to school – drought, for instance. So one might find microcredit clients pulling their kids out of school for reasons unrelated to their loans.
On an unrelated note, I came across a sentence I totally loved whilst rereading Understanding Poverty recently – “these essays presage what we feel is an important new trend in the economics of poverty: a willingness to take the social and psychological environment of the poor seriously.” This is probably the most fruitful interaction possible between qualitative and quantitative disciplines in the study of development – a genuine respect for the psychosocial lives of the poor.
A bit of a rant, so feel free to find the egress if that’s not what you’re here for. But: beyond the standard stereotypes (either “savage tribal wars” or “happy villagers living in harmony with nature”), there are several slightly more complex cliches about Africa that make me want to grind my teeth. In fact, one could create a taxonomy of the African Cliche (genus Africanus) as follows:
- Africanus stereotypicus: The most common type of cliche, the Africanus stereotypicus typicus feeds off of broad generalizations of African history. It is characterized by its Manichean coloring, varying between the black of moral depravity and ancient ethnic hatreds, and the snowy white of peaceful farmers who live “as nature intended.” Other subspecies include the Africanus stereotypicus puerilis, known for its grating proclamations that Africans are too childlike to make decisions about their own lives, and the Africanus stereotypicus type-419, which exhibits severe distrust of Africans in the belief that they are all corrupt, dishonest, and/or Nigerian scam artists.
- Africanus journalisticus: Cliches of the the journalisticus group are most often found lurking in the mediocre Africa coverage of otherwise well-respected news publications. The Africanus journalisticus natura is frequently sighted in Madagascar, where international coverage of recent coup attempts uniformly begins with glowing descriptions of the country’s vibrant plant and animal life, in the belief that they must suck readers in with images of lush vegetation before seguing into actual African politics. The Africanus journalisticus spillover, on the other hand, is more often found in Congo and Somalia, where articles on the real suffering of millions of human beings justify the space they take up in Western newspapers either by A) referring to the current conflict as the spillover of a more interesting conflict (e.g. the Rwandese genocide), or B) explaining that the conflict is important because it could create terrorist threats that might spill over into the readers’ comfortable lives. A final subspecies, the Africanus journalisticus darfurensis, has seen a dramatic fall in its numbers after the population explosion of 2003-2004. However, the darfurensis still retains its unique ability to reduce the interwoven political, economic, environmental, and social roots of the genocide in Darfur into a simple morality tale of evil Arabs and innocent Africans.
- Africanus occidentalis: This cliche is at home in a broad variety of habitats, be it among development practitioners or wide-eyed teenagers visiting Africa for the first time. It can be distinguished by its prominent belief that concerted Western action can solve all of Africa’s problems. The Africanus occidentalis studentia lives a peaceful life in the dorm rooms of university students, who often react to its presence by talking at length about the spiritual connection and cultural vitality that they experienced while visiting one country in a very large continent for two weeks last summer. (The tragedy of receiving a university education whilst children in Africa are dying is an alternate topic, although this should not be confused with actual discussions of Rawlsian justice.) The Africanus occidentalis interventionis, on the other hand, prefers to settle among career development workers who really should know better. These include advocates of poorly thought-out boycotts that don’t address the roots of the labor issue in question, World Bank officials who support oil pipelines in Chad, and bloggers who duly repeat that the West must pay more attention to Africa’s suffering, as though the Western gaze has always been the missing ingredient for African development.
- Africanus impecunius: The Africanus impecunius is a specialized breed, whose natural habitats include NGO websites, blogs written by economics professors, and the Twitter streams of thousands of people with a passing interest in African poverty. Many subspecies in the impecunius group appear outwardly similar, but the practiced African Cliche-ist can easily spot their differences. For instance, the Africanus impecunius donatio is usually spotted at fundraisers in major Western cities, wooing potential donors with pictures of malnourished African children and practicing its “you have the power to save a life” call. The donatio‘s primary competitor is the Africanus impecunius entrepreneurius. The entrepreneurius prefers a stealth attack, often sneaking up behind the donatio at conferences and beating it over the head with large sets of panel data on import substitution policies. (Meanwhile, the Africanus impecunius polisci avoids these territorial clashes in favor of migrating from think tank to think tank, seeking a credible way to actually implement all of its theoretical insights about the importance of good governance.)
Ok, taxonomic rant finished. (Although I guess the entrepreneurius and the polisci are more stock characters than cliches.) The common thread among many of these tropes is my impatience with people who don’t make an effort to move past their Western points of reference when studying/discussing/visiting/speaking with/working with Africans. And I am saying “Africans” and not “Africa” very intentionally. There’s a large lexical difference between thinking of a place primarily in terms of the people who live there, and thinking of it almost as an anthropomorphized piece of suffering land. Consider sentences like, “Africa is unlikely to achieve the MDGs,” or “Africa suffers disproportionately from AIDS.” They don’t make any sense unless one interpolates some people in there to do the suffering, but this type of statement – endowing the continent as a whole with sentience and linguistically skipping over the people who actually live there – is usually taken at face value.
Anyway, I mention the perils of not questioning Western frames of reference not because I believe Western capitalist culture is evil, but because it’s at the least misguided and at the most dangerous to view everything in the world through the lenses of one’s own national affiliation. Misguided is assuming that Western actions are the only important actions in the world, as though non-Western political leaders or private individuals can’t impact a situation as well. (C.f. the movement for American companies to boycott Congolese minerals, which I guarantee will accomplish nothing besides making a bunch of Chinese manufacturers happy about their increased access to the mines.) Dangerous is failing to move beyond assumptions in situations where one’s actions actually may have a large impact – and where one is working in the midst of great power disparities to boot. (C.f. the assumption that structural adjustment would provide sufficient trickle-down benefits for the poor to counterbalance the loss of government-funded social services in the short run.) The fact that cross-cultural work is difficult doesn’t mean it shouldn’t be done. But cross-cultural work in the face of extremely uneven power relations demands that one actually take the time to thoroughly learn the environment in which and the demands of the people with whom one will be working, instead of resting on cliches.
Lending group sizes: Read something recently stating that repayment rates were highest among a studied selection of lending groups when the group had 14 people in it. I find this fascinating – is it something like Dunbar’s number for close friends, instead of general social connections? What I don’t totally understand is why the number would be as large as 14. It seems to me that the social pressure exerted by any one individual on others would decrease linearly with the number of group members – that is, I can put more pressure on 5 other people to repay their loans than on 14, because of my own time constraints. Or perhaps the limits on social pressure are outweighed by the implicit pressure of having 13 other examples of people successfully repaying their loans, instead of just 4? Freakonomics mentioned some research recently about the power of implicit social pressure (or sanction) in guiding behavior, with regard to people seeing examples or merely believing that a majority of others were acting in a certain way. Perhaps one could think of living up to an example (of loan repayment, in this case) as a way of earning social capital, instead of actively spending it by pressuring other group members to repay their loans.
Social determinants of lending group access: Another predictable but still interesting fact is that self-selecting lending groups are sometimes reluctant to take on members who are too poor – lacking social capital as well as financial (and isn’t that a metaphor for poverty in general?). It does make sense to view current poverty as deterministic of future entrepreneurial success, from the POV of another lending group member, but I also wonder if group members would view occasional poverty (i.e. brought on by a recent illness) differently than chronic poverty. How long does someone have to be abjectly poor before a lending group is more likely to reject them? That’s an interesting question. [NB: Can’t find citation for this, although I think it may have come from Understanding Poverty.)
Monthly vs. weekly repayment schedules: This was a wonderful study – an analysis of whether Indian MFI clients were more likely to repay their loans if they made weekly repayments, monthly repayments, or monthly repayments with weekly group meetings regardless. Repayments didn’t actually vary in a statistically significant manner across any of the three repayment schemes, although the monthly group actually had the lowest rate of missed payments according to the raw data. I say “wonderful” because this knowledge is a great step towards designing lending programs that are better suited to the variable and unpredictable incomes of the poor – it’s quite valuable to understand that time-consuming weekly repayments aren’t necessary to pressure clients into repaying, which may give them more flexibility with their repayments (and use of loans).
Just a quick note on the research on agricultural supply chains that I’m doing right now – I’m finding it fascinating that one can guess at the nutritional status of households based on their income elasticity of food expenditures. Poorer households tend to have an elasticity of demand close to one, suggesting that people who are far from getting their nutritional needs met will spend almost all additional income on food. Wealthier households in developing countries, on the other hand, are more likely to have an elasticity of close to zero, suggesting that people who are well-nourished will spend little additional income on food. Of course, it’s also been found that some wealthier households have an elasticity of caloric intake close to 0.5, hinting that as income goes up, consumption of packaged foods that are more expensive and less healthy may crowd out some cheaper and more nutritious foods. This is so cool – graphical representations of the complex social & economic realities that govern food choices.