Like all national poverty rates, India’s poverty rate is interpreted as the share of the population that is poor in a given year. In this post written for Ideas for India, Joshua Merfeld and Jonathan Morduch argue that, in practice, India’s poverty rate is better thought of as the approximate fraction of the year that households experience poverty. They describe how this is rooted in the nature of data collection, and how it changes understandings of poverty and policy in the country.
FAI in the News: The New Barometer of Americans' Financial Health? $75,000
FAI’s Managing Director Tim Ogden was cited in an article in Next Avenue by Richard Eisenberg about a new study of 5,000 Americans with household incomes of less than $75,000 per year. This study was carried out by Assurance IQ, a a Prudential Financial subsidiary, and was inspired in part by the US Financial Diaries, led by FAI along with the Center for Financial Services Innovation.
The new study found that 57% of respondents aged 50 and older with incomes under $75,000 struggled to pay bills last year; that 38% couldn’t afford their health insurance deductibles; and that 31% avoided medical care due to cost. If faced with a future unexpected medical expense, 28% said they wouldn't be able to cover it without affecting their ability to pay monthly bills.
The financial volatility experienced by these households—also a main finding of the USFD study—prevents families from planning and saving for financial goals that are (or seem) far in the future.
Ogden said he wasn't surprised by Assurance IQ's findings because incomes are often highly volatile for these households. Many are either hourly workers with varying hours or in jobs that aren't steady.
"Most of what we talk about in financial planning and budgeting starts from the assumption that you know how much money you have and how much you're going to earn. But if you don't know that, how do you create a budget?" Ogden said.
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As Ogden noted, when income is volatile, trying to plan for future expenses, like retirement costs, "is really difficult when you're worried about how much I need to save up for the six-month car insurance payment."
Online financial planning questionnaires, he said, typically assume you know your future income and spending needs.
Access the Next Avenue article (published April 4, 2024) and read the Assurance IQ study report.
FAI In the News: Microfinance: Evolution at the crossroads of high tech and high touch
FAI’s Managing Director Tim Ogden was cited in an article in Philanthropy News Digest about the successes and failures of the microfinance movement, and how technology is changing the future of microlending. Ogden discussed the ongoing need for subsidy in microfinance, how to factor in the true costs of digitization, and the risk that high-tech approaches exclude the poorest and hardest-to-reach populations.
"The great success of microfinance,” said Ogden, “has been in radically increasing the number of people who have control of their own decisions because they now have access to some financial tools that enable them to choose to save, to borrow, to insure themselves, to send money, all at their choosing, rather than somebody else's. For microfinance to thrive, it needs to find a mechanism that allows for continuous subsidy and a new narrative that is more honest about the actual cost of each small investment.”
Read the entire article, by Daniel X Matz, here.
Introducing a New Study on Platform Labor in India
One frame on FAI’s research agenda is understanding the role of employment in development. How does employment help people escape from poverty? What kinds of jobs—for instance formal employment, self-employment, casual labor— are best for improving people’s wellbeing, economic and otherwise? What are the characteristics of a “good” job?
Read MoreThe Microfinance Promise: Developing Worlds Interview Part 5
In this concluding excerpt, Morduch and Labie discuss the continuing relevance of microfinance, and re-assess an influential paper authored by Morduch in 1999 called “The Microfinance Promise.” While much has changed since the paper came out, Morduch says he’d keep the title— “The sector can count incredible successes, but the biggest economic and social ambitions remain as promises.”
Read MoreMicrofinance Methodologies: Developing Worlds Interview Part 4
Morduch and Labie discuss trends in thinking around how microfinance has been delivered and funded over the past decades, including group lending, subsidies for microfinance, the tension between the need for discipline and flexibility, and how advances in technology are shaping the field.
Read MoreMicro-financing Women’s Empowerment and Rural Development: Developing Worlds Interview Part 3
Morduch and Labie take a look back at two of the original goals of the microfinance movement—empowering women, and bolstering rural development—and discuss the evidence on how well interventions have achieved those aims.
Read MoreBuzzwords in Microfinance: Developing Worlds Interview Part 2
Microfinance is a rich text for students of rhetoric. In practice, each shift in wording has brought a shift away from concerns with poverty and social justice toward finance for less poor populations.
Read MoreThe Evolution of Microfinance: Developing Worlds Interview Part 1
In a recent interview for the journal Mondes en Développement Jonathan Morduch looked back at what we’ve learned about microfinance and financial inclusion in the past decades, and shares how he thinks those lessons can shape future policies to help poor families better manage their money.
Read MoreWATCH: Plunging Into the Digital Economy, but Still Tied to Cash
In this video we created for Financial Inclusion Week, we sift through data to tell the story of businesses straddling the borderlands between the cash and digital economies after COVID-19.
Read MoreFAI in the News: Financial Education Programs Won't Address Widening Literacy Gaps in the US
FAI’s webinar on the Financial and Literacy Gap was cited in an article published by Yahoo Money on September 11, 2022. The article by Kerry Hannon explored the reasons for a steady decline in financial and digital literacy in the United States over the last 12 years, and spoke to experts about measures to counter the decline.
Read MoreThe Revolution MUST be Digitalized
If MFIs fail to digitalize, it could mean the end of financial services for the rural poor, because the business case is so challenging, particularly compared to the diverse, low-cost opportunities to serve the higher-value, connected urban market. In short, this could end years of progress towards financial and social inclusion.
Read MoreRegister for our June 7 Webinar: Microfinance Meets Pandemic: Two Years Later, Two Years From Now
The Financial and Digital Literacy Gap: It’s a Trap!
Welcome to this month’s faiVLive webinar. Watch the recording on our YouTube channel here.
There’s no question that there are big gaps in financial literacy between the rich and poor, and between those included and excluded at every income level and in every country. As digital finance becomes more important, the gap grows and takes on added dimensions. No wonder that financial (and now digital) literacy programs attract attention and millions of dollars globally.
Read MoreResources on Digital Money and Upcoming Webinars
Digital Money Systems Explained: In Conversation with Mastercard’s Jesse McWaters (Part B)
This is the second post of a two-part blog that distills the conversation from our last webinar, on digital money, with FAI’s Tim Ogden and financial policy expert Jesse McWaters, Head of Global Digital Public Policy at Mastercard. The first part covered some basic frameworks for thinking about these concepts. This one covers the regulatory environment around digital systems.
This two-part blog post distills the conversation from that webinar. The first part covered some basic frameworks for thinking about these concepts. This one covers the regulatory environment around digital systems.
Read MoreDigital Money Systems Explained: In Conversation with Mastercard’s Jesse McWaters (Part A)
In our December faiVLive webinar, FAI’s Tim Ogden sat down with financial policy expert Jesse McWaters, Head of Global Digital Public Policy at Mastercard, to demystify some basic questions around digital money and its evolving role in financial inclusion. What’s the difference between a digital payment system and a digital currency? What is blockchain really and how should we use it? Who makes the rules in a decentralized digital money system? Do those rules protect or expose consumers? Can the offerings and their regulations be designed to be pro-poor?
This two-part blog post distills the conversation from that webinar. This one covers some basic frameworks for thinking about these concepts. The next will cover the regulatory environment around digital systems.
Read MoreRegister Now | From M-Pesa to Dogecoin to the Digital Naira: The Role of Digital Money in Financial Inclusion
Join FAI’s Tim Ogden in conversation with Jesse McWaters, the Global Head of Regulatory Advocacy at Mastercard, to explore some basic frameworks for understanding the differences between the rapidly growing types of digital currencies. Through this session you’ll gain a better grasp of new and evolving digital means of exchange, how they interact, and what that means for pro-poor financial inclusion.
Read MoreWelcome to Today's faiVLive: Building an Inclusive Financial System
In 2009, FAI founder Jonathan Morduch was part of a group that determined “half the world is unbanked.” Ten years later, the latest Global Findex tells us that the world’s unbanked population has been nearly cut in half …
Read MoreRegister Now | faiVLive: Building an Inclusive Financial System
In 2009, FAI founder Jonathan Morduch was part of a group that determined “half the world is unbanked.” Twenty years later, the latest Global Findex tells us that the world’s unbanked population has been nearly cut in half …
Read More