Julian Jamison, Innovations for Poverty Action, USA, Research Symposium, Case Studies from the Field

Julian Jamison, Innovations for Poverty Action, USA, Research Symposium, Case Studies from the Field

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  #18MCSummit Financial Education and Accessto Savings Accounts: Complements or Substitutes? Julian Jamison (World Bank) Dean Karlan (Yale) Jonathan Zinman (Dartmouth)
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  3/29/2016 23/29/2016 2 #18MCSummit Motivation Whatis the value of “emergency savings” and avoiding high-cost credit products? International: microcredit microsavings Can saving become a habit among youth? [Cf new 22-year-old UAE Minister of State forYouth Affairs] Obstacles to saving Access information preferences
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  3/29/2016 33/29/2016 3 #18MCSummit Previousliterature Mixed results on financial literacy & education Indonesia:Cole-Sampson-Zia (2011) find no more likely to open savings acct, whereas small subsidies do much more India: Field et al. (2010) no impact on prob of saving Several recent review articles (Hastings-Madrian-Skimmyhorn 2013; Karlan-Ratan-Zinman 2013; Fernandes-Lynch-Netemeyer 2014) conclude that evidence is scant, mixed, and on the whole negative
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  3/29/2016 43/29/2016 4 #18MCSummit Previousliterature Mostly positive results from access Subsidies: Dupas-Robinson (2013) and others generally find more accounts and more usage Branches: Burgess-Pande (2005) andAshraf-Karlan-Yin (2006) find both increased saving and increased downstream outcomes such as income Contrast to the mostly negative (neutral) evidence on access to microcredit, e.g. Banerjee (2013)
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  3/29/2016 53/29/2016 5 #18MCSummit Background Ugandahas a very young population (52% under age 15); current actions may have a large effect Generally low savings rate (even compared to e.g. Kenya) – can ‘move the needle’ and develop habits Small communities, often no bank branches within 1-2 hours; usually expensive to maintain accounts
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  3/29/2016 63/29/2016 6 #18MCSummit
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  3/29/2016 73/29/2016 7 #18MCSummit BehavioralRCT Design What is the impact of education and access on these youth? Impact evaluation measures: How have their behaviors and outcomes changed compared to how they would have changed in the absence of the program? Note this is different from “How have their lives changed?”
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  3/29/2016 83/29/2016 8 #18MCSummit Intervention Randomized240 Church of Uganda youth groups into four arms: control, Education only, Account only, and Educ+Account Each group has 15-40 members, although not all active, with an average age of 24.5
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  3/29/2016 93/29/2016 9 #18MCSummit 240youth clubs 25%: Control 25%: Financial Education 25%: Account Access 25%: Educ + Account
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  3/29/2016 103/29/2016 10 #18MCSummit Baselinecharacteristics Account only Educ only Account +Educ Control f-test p-value Proportion female 0.43 0.41 0.42 0.44 0.33 Has formal account 0.12 0.13 0.17 0.13 0.71 Proportion in school 0.37 0.39 0.38 0.39 0.72 Income last 90 days (‘000 USH) 147 146 169 141 0.42 Club has money 0.82 0.70 0.77 0.83 0.24 Club has account 0.07 0.05 0.08 0.07 1.0
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  3/29/2016 113/29/2016 11 #18MCSummit Financialeducation Developed by IPA, Freedom from Hunger, and Straight Talk Foundation One 90-minute session per week for 10 weeks Mean attendance 4.7 sessions (with 75% ≥ 1) Focused on saving, but also general finance: Myths about banks Saving vs borrowing Goal-oriented saving Budgeting and spending Challenges, including negotiating around money
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  3/29/2016 123/29/2016 12 #18MCSummit Groupaccounts Simplified opening procedure; no fees then or later Required to make a deposit within 30 days of opening, and to maintain balance of 50000 USH One account per group, with multiple co-signers This decreased transaction costs, but required more trust (one reason to use existing church groups) Everyone trained to read / use ledger for keeping track of individual balances 66% of treatment groups opened an account
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  3/29/2016 133/29/2016 13 #18MCSummit Dataand methods Baseline (n=2810) and endline (n=268o) surveys include Basic demographics; some risk, time, & social preferences Work, income, and consumption measures Financial knowledge Borrowing, lending, and saving behavior Admin savings data from the two Account arms Estimate effects of each treatment (using dummy for assignment) on various outcomes Controls: demographics; baseline values when possible Fixed effects for region and initial club savings level, which were both used for stratification
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  3/29/2016 143/29/2016 14 #18MCSummit Results:saving
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  3/29/2016 153/29/2016 15 #18MCSummit Results:saving LHS: Balance (‘000 USH) 99% trim Total saving (‘000 USH) 99% trim bank admin data survey data Acct only 52.8 (55.2) 22.8 (26.3) Educ only 127.9** (62.0) 56.6* (30.0) Acct+Educ 1.21 (1.02) 1.05* (0.45) 17.8 (46.0) 52.3* (27.9) comparison mean 1.61 0.49 247.1 185.7 n 3775 3738 2678 2647
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  3/29/2016 163/29/2016 16 #18MCSummit Results:saving & borrowing Financial education increases savings 1-2 years later! Account access also increases savings, although less significantly and robustly than education No significant changes in borrowing, other assets, or expenditures Hence increased saving is changing overall wealth
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  3/29/2016 173/29/2016 17 #18MCSummit Results:income
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  3/29/2016 183/29/2016 18 #18MCSummit Results:income LHS: Earnings in past 90 days (‘000 USH) 99% trim Acct only 30.7 (33.5) 37.0** (16.5) Educ only 23.7 (30.7) 45.0*** (16.2) Acct+Educ 34.1 (35.2) 53.3*** (18.0) control mean 232.8 184.1 n 2679 2652
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  3/29/2016 193/29/2016 19 #18MCSummit Results:income & employment Earned income increases for all treatment arms, at roughly equal levels This implies there exist downstream effects of the interventions, beyond even savings behavior! We do not observe any significant effects on hours worked, business investment, or school attendance These are fairly imprecisely estimated, so difficult to distinguish mechanisms linking saving and income
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  3/29/2016 203/29/2016 20 #18MCSummit Conclusion Financialeducation impacts knowledge & behavior We do not observe significant differences in either savings or income between education and access Evidence suggests that they are substitutes rather than complements – and as a byproduct that knowledge may not be necessary for downstream outcomes At second endline, the combined intervention does perform relatively better than separate ones Policy recommendations depend on the cost-effectiveness of each intervention
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  3/29/2016 213/29/2016 21 #18MCSummit Thankyou! DFID for funding Freedom from Hunger, StraightTalk, FINCA, and the Church of Uganda for cooperation throughout Sarah Kabay, Daniel Katz, Sana Khan, Charity Komujurizi, Matthew Lowes, Justin Loiseau, Joseph Ndumia, Pia Raffler, Elana Safran, Marla Spivack, and Glynis Startz for research support