psychology of scarcity: providing financial education under the poverty lines

Psychology of Scarcity: Providing Financial

Education Under the Poverty Lines

Cristina Carrillo RiveroAddkeen ConsultingInvestor Education and

Financial Behavior ConferenceRio de Janeiro, 10-11 December,

2013

Mr. Doer

Mr. Planner

Financial Education:Irrational people trying todesign rational programs for other irrational people

Hard to put ourselves in others’ shoes?

What about living under the poverty line?

ResearchFrom Poor Economics (Duflo and

Banerjee) to Scarcity: Why Having Too Little Means So Much

(Shafir and Mullainathan)

Some help to understand the scarcity mindset…

Field experiences Pro-Savings projects and cases

(MIF)Innovations for Poverty Action

(IPA)

…and a poverty simulatorplayspent.org

The here and now… and its consequences

for our financial education initiatives

No planning for

tomorrow No sustained

interest in learning

Labor informality. Reliance on public

benefits

Two experiences of financial education in context

Access to banking services for public benefits recipients

(ascending savings)

Entrepreneurship

program for microcredit borrowers

(descending savings)

… and suggested applications

Key points collected…

Mistrust of strangers

Community leaders

as trainers

1

… and suggested applications

Key points collected…

Lack of motivation to follow the

program

Used of incentives to encourage participation

2

… and suggested applications

Key points collected…

Wide range of unmet social and educational needs

Practical and context-bound

approach

3

… and suggested applications

Key points collected…

Higher effectiveness

of individualized interventions

Supporting peer groups

4

Our obsession with quantitative objectives:

What and how to scale?

Financial education

is a long-term investment…

… but in the meantime,

we can nudge!

Understanding the real environment… and the

decision-making process

As a conclusion…

Effective partnership: the role of the influencial

members of the group

Encouraging participation: incentives, context-bound approach… and nudging!

Thank you!

cristina.carrillo@addkeen.net