A recent article on the “average impact of microcredit” by Dr. Rachel Meager (LSE) has received much praise over the past few weeks. Meager deploys Bayesian hierarchical modelling to provide a new take on the argument in favour of a reformed system of microcredit. Her work builds on the data provided by six randomized control trials (RCTs) conducted by Abhijit Banerjee and colleagues (see Banerjee, Karlan and Zinman, 2015). Meager makes an attempt to exculpate the microcredit model from the awkward fact that its impact on the poor has been very much less than originally envisaged. She also claims to show that the critics have overstated the negative impact of microcredit. Microcredit should therefore continue to be a policy intervention, she goes on to say, but there need to be changes in the operating methodology for a more meaningful development impact to be possible in the future.
While seemingly a well-meaning attempt to explore the impact of microcredit, we were struck by the way that her overall argument appears to seriously misunderstand, and it definitely misrepresents, the existing research onmicrocredit as a development instrument. Read More »
The debate in Higher Education (HE) in the UK is slowly starting to recognise that inequality in education is both the cause and consequence of societal elitism. As a result, there is an increasing debate about widening access to academia, and more and more newspaper articles are devoting attention to the few who made it through the Oxbridge close-circle system.
On the 17th of May 2019 the Reteaching Economics and IIPPE Teaching Political Economy working group organised a workshop on economic pluralism, teaching and research. I was chairing the panel on “Challenges and Opportunities for the Economics Curriculum Around Decolonisation, Gender and Diversity” which included brilliant contributions from Dr Meera Sabaratnam (SOAS), Dr Lucia Pradella (King’s College), Dr Ingrid Kvangraven (University of York) and Ali Al-Jamri (Rethinking Economics, Diversity Campaign Manager). They addressed various political, historical and cultural issues around neocolonialism, imperialism, racism, sexism and gender segregation in HE at large and in the economic discipline in particular. Considering the potential great complementarity of the topics, I thought it was relevant to bring in the class dimension in the discussion. I noticed that while the marginalization of women and people of color is rightly getting increasing attention, the class dimension is sometimes forgotten. Indeed, although class remains a crucial lens to untangle injustice and exclusion in the HE industry, it isn’t dealt with with as much urgency. Maybe also because it’s a bit less visible. Indeed, last week I was discussing this issue with another ‘academic migrant’ from Southern Europe, and he suggested: “Panels should ask “what do your parents do/did for a living?” during job interviews.
To prepare my presentation, I approached a couple of ‘data intelligence’ offices in UK universities asking for facts about the class dimension of access to higher education in the UK. I was pointed to the Office for Students, which is a new resource that enables us educators, but also students, to look at various key bits of data on the university sector as a whole, and on individual universities. A very useful resource indeed!
So here is what I found, and the results are pretty discouraging. Read More »
Getting access to credit is a critical challenge for small-holder farmers all over Sub-Saharan Africa . A new breed of financial-technology firms (fintech) promises to address this issue, claiming that digital technologies can lower the barriers for borrowers and cut transaction costs for lenders. As part of our ongoing project on digitisation and data in US and Kenyan agriculture, we have been examining these claims, studying how tech companies translate them into business initiatives and exploring the implications for knowledge production, economic growth and value redistribution.
In rural Kenya, fintech innovations are premised on greater efficiency and transparency and inspired by narratives of digital disintermediation. Similarly to what argued for migrant remittances by Vincent Guermond in a previous post of this blog series , digital lenders harness data (extracted through digital infrastructures) and algorithms to make farmers more legible and, therefore, more predictable. In order to expand their pool of data, Kenyan fintechs are increasingly embedding themselves into inter-connected digital infrastructures, or platforms. These platforms provide farmers with end-to-end solutions, and thereby bundle together financial services with the provision of agricultural inputs and information extension services. In so doing, lenders recalibrate and harmonize their risk-assessment procedures, and construct an ideal type of farmer whose financial behaviours and importance in the local value chain can be clearly pinned down.Read More »
In recent decades, market-based solutions such as financial inclusion have become more popular in developed countries to reduce inequalities and boost wealth and incomes of the poor. There is no better example of this than the recent thrust of low-income families, women, ethnic minorities, and the young into the subprime mortgage lending expansion in the USA since the early 2000s. Higher access to formal loans for these households was argued to enable them to climb the magical ladder of homeownership and achieve their American Dream. But as we know, the picture didn’t turn out to be quite so rosy.
10 years since the Great Recession, many families are not seeing recovery as the impact of the crisis was substantially harsher for the subprime borrowers (Young 2010; Henry, Reese, and Torres 2013). Financial inclusion in the subprime period turned out to be predatory. In this post, I explore how things went wrong when policy makers failed to account for the institutional conditions in the US economy, which led to dramatically different experiences of financial inclusion across social classes, gender, race, and generations.Read More »
On 8th November, 2016, the Indian government announced that it was banning the use of 500 and 1000-rupees currency notes from midnight, effectively scrapping 86% of India’s currency notes by value. The Indian public would have to change the outlawed currency notes for new ones at bank counters by the end of the year.
In the following months and years, the move, which came to be known as demonetisation, caused immense suffering to the Indian public and damage to the Indian economy. So, why was it carried out? In an upcoming paper, Daniela Gabor and I seek to demystify demonetisation by locating it within wider changes in the Indian economy—changes that started in the financial inclusion space but are now reverberating across the entire financial sector. We refer to this process of change as digital financialisation.Read More »
A decade has passed since the Global Financial Crisis (GFC) which seems an apt time to begin talking about the event that has pushed the concept of financial education to the core of global policymaking debates. Despite its growing popularity today, financial education has existed in the premise of global policymaking for the past few decades. The benefits of financial education seem endless; poor national financial literacy levels have been blamed for adverse socioeconomic effects such as high national household debt and/or a general irrational exuberance in financial consumption behaviour (see e.g. here). Along the same lines, low national financial literacy rates have been seen as indicative of overall financial instability, the types that have been argued and blamed as causal mechanisms of the GFC. Thus, financial education is held as an empowering dogma, its dissemination seen as providing citizens with the knowledge that would empower them to access financial services in a sustainable and meaningful manner. Read More »
India’s opposition leader has recently floated minimum income support. The 1.5% GDP equivalent it requires can be financed through a 3% tax on the richest 3000. It is not just an idealized safety net for the poor – it has been done before, for the super elites.If it works, it can be a model for adoption in other emerging democracies.Read More »
In a recent article in the New York Times, the development economist Seema Jayachandran discusses three studies that used Randomised Controlled Trials (or RCTs) to understand the benefits of enhancing the self-worth of poor people. Despite wide differences in context, all the cases explore the viability of ‘modest interventions’ to ‘instill hope’ in marginalised communities, concluding that ‘remarkable improvements’ in the quest for poverty reduction are possible.
One of the studies from Uganda, for example, argues that “a role model can have significant effects on students’ educational attainment,” so the suggestion for policy-makers might be “to place more emphasis on motivation and inspiration through example.”Another case study of sex workers in Kolkata Brothels argues that “psychological barriers impede such disadvantaged groups from breaking the vicious circle and achieving better outcomes in life,” so small but effective changes that address these psychological constraints can alleviate the effects of poverty and social exclusion.
The underlying theme of these studies is that individuals can surmount the structural challenges of poverty through their own efforts using tools like ‘effective role models,’ the generation of ‘more hope,’ and the ‘improvement of their mental health.’ Positive psychology of this kind and an emphasis on behavior change to meet the goals of individuals have been around at least since the 1950s, first in the popular literature of self-help books and now in academia, where they form part of an increasingly fashionable trend to ‘do poverty reduction differently.’Read More »