In an Indian city, women paid a collector to hold their daily savings, at about minus thirty per cent a year, and called it cheap. From Nairobi's savings circles to bank experiments in the Philippines, why protecting money comes before growing it, and one small first step that fits your month.
Takeaways
- In a case described by Stuart Rutherford in Vijayawada, India, women paid a deposit collector a fee worth about minus 30% a year to hold their daily savings.
- A place to save has two jobs before it earns anything: a wall against other people's claims and a wall against your own future self. In studies in Kenya and the Philippines walls made a difference; a wall too strict didn't help, and a plan people set badly cost many of them money.
- This week: one goal, one small amount, one wall.
Chapters
- Paying to save0:16
- Zero interest, and full2:00
- Two walls4:16
- Two leaky months7:00
- Hear it done8:12
- Build yours9:26
- The answer11:17
References
- Rutherford, S. — The Poor and Their Money(2009)
- Rutherford, S. — The economics of poverty: How poor people manage their money
- Anderson, S., & Baland, J.-M. — The economics of roscas and intrahousehold resource allocation(2002)
- Gugerty, M. K. — You can't save alone: Commitment in rotating savings and credit associations in Kenya(2007)
- Ashraf, N., Karlan, D., & Yin, W. — Tying Odysseus to the mast: Evidence from a commitment savings product in the Philippines(2006)
- Dupas, P., & Robinson, J. — Why don't the poor save more? Evidence from health savings experiments(2013)
- John, A. — When commitment fails: Evidence from a field experiment(2020)
- Zambrano, A. F., et al. — Rotating savings and credit associations: A scoping review(2023)
- J-PAL — Constraints to saving for health expenditures in Kenya