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Written by: Zoe Sexton | Digital Capital Network
Finally, there is a place where our obsession with data collection can help. While outrageously invasive, big data is helping us do many things these days and might even help social impact investing. Some of Big Data motivations are driven by consumerism and the need for buyer research, and others are reporting information that can make serious social impact in a Good way. There is a new ecosystem of data-driven programs designed to help the poor save more, live better and discover economic security for themselves.
The US and other wealth nations have spent trillions of dollars in the past half-century trying to lift the world’s poorest people out of penury, with largely disappointing results, reports Jason Zweig of the Wall Street Journal. He goes on to report a new generation of programs that have a different approach; one of basic financial planning.
It’s become clear that most welfare programs don’t usually do what they were purportedly intended to do. In fact they can create a vacuum of poverty it is hard to escape from. And this is where data is changing that outcome with a new charge in the area of anti-poverty policy.
Baristas of the Future
They call themselves “randomistas”, utilizing the scientific method they are staging random ‘interventions’ in a series of controlled trials. Over the course of the last eight years the data they’ve collected in experiments all over the world, from the poorest regions of Ethiopia to the United States. A report published in the journal Science in May found that the randomistas’ methods not only work but stick.
Some of their experiments include grants of livestock, business assets, stipends and even temporary lock-up access to immediate funds in savings accounts. The results are measured in percentages of food consumed (increasing where people were starving), acquisition of assets and the ability to save money. They used incentives like clean water, food, and accessibility; things that make sense to people who are living hand-to-mouth and day-to-day.
Up until recently, governments and donors were not using any scientific process to see if their efforts were working or not and were unable to adjust to what does work. Things have changed and large institutions including Princeton University, The World Bank, Columbia University and MIT. Showing positive sustainable results makes people, businesses and institutions who want to support positive social change more inclined to do so. This is likely going shift HOW we make those investments by changing how the game is played.
“The daunting realization is that we don’t know what the hell we’re doing in most fields of life, especially the ones that involve people,” says Richard Thaler, professor of behavioral science and economics at the University of Chicago Booth School of Business and author of the new book “ Misbehaving: The Making of Behavioral Economics. ” He adds, “The alternative to guessing is to run experiments.”
And so they have, recording the results of mostly way to address the phycology of poverty and it gets replayed through generations and social systems. It is much more expensive and challenging to navigate financial challenges when you are poor. You end up paying more for everything and use an inordinate amount of your time and thought process navigating day to day challenges as basic as avoiding over-draft charges and finding affordable sustenance. Read the full article here .