Why are piggy banks in the shape of a pig? I had been certain that piggy banks were simply a decorative representation of the fact that keeping a pig (or any livestock) is an informal way to save—“deposits” paid into the pig by feeding and housing it can be “withdrawn” once the pig is sold. A bit of research informed me, however, that the etymologists have the economists beat on this one. The name derives from the old English word for the ceramic once commonly used to make household containers, “pygg.” Saving in these “pygg banks” became popular, and potters began to create savings boxes in the shape of the animal.[i] . . .
Linguistic origins of the piggy bank aside, I have been thinking about livestock-as-savings after happening upon a book chapter by economists Christopher Barrett, Marc Bellemare, and Sharon Osterloh . . . . . .
Read MoreThe Curiosity rover’s Mars landing is only the most recent instance of the awe-inspiring advances made by the physical sciences. Our wonder at such achievements has even become codified in our language. “It’s not rocket science!” is the standard invocation to suggest a problem just requires common sense instead of the complex physics of, say, landing rovers on far-away planets. The phrase has been directed at everything from Social Security to healthcare, and yes, to poverty alleviation programs. . . .
But, as I heard recently from researcher Duncan Watts, social science “is not rocket science—we’re actually pretty good at rocket science.” He proceeded to list a bunch of “hard” science things that humans have figured out quite well—vaccines for diseases, satellites in orbit, and any number of biological, chemical, and technological advances. The issues explored by “soft” science—how to get people vaccinated, prevent civil wars, and bring about gender equality—now that’s the hard stuff . . . . . .
Read MoreRemittances represent an important source of income for millions of households around the world. The size of remittance flows, as compared to a country’s own domestic output, can reach numbers as high as 30% (that’s in Tajikistan, if you’re wondering.) This has led economists and policymakers alike to ask whether remittances can be relied upon to spur development. One way this might occur is if remittances are more likely to be spent on productive investments, increasing the domestic income-earning potential of households . . . . . .
Read MoreNicholas Kristof is catching a lot of flak these days for a recent column on what he calls an "ugly secret of global poverty." Citing conversations with people in Congo, as well as research by IPA Research Affiliates Abhijit Banerjee and Esther Duflo, Kristof explains that it is not necessarily true that the poor can't afford certain important purchases such as mosquito nets or school fees. Rather, funds that could have been spent on those crucial items are instead funnelled away to less than virtuous items such as alcohol, tobacco, or gambling. . . .
But calling this tendency to spend money on small luxuries an "ugly secret of global poverty" is misleading. It's not only about global poverty. Everyone spends money on things they don't necessarily need, and could forego in order to save for bigger, important purchases. I, for one, would have around fifty more bucks a month in my savings account if I could kick my Diet Coke habit. (Ouch!) It's just that I'm fortunate enough to live in a space where that fifty bucks isn't the difference between whether or not I get a primary education, or a deadly malaria infection. I don't think it's that the poor are necessarily more susceptible to temptation than the rest of us. The poor just have less room for error. . . .
Read MoreThe blog over at the European Bank for Reconstruction and Development (EBRD)recently featured a post by Senior Economist Ralph De Haas, who describes a randomized evaluation of microfinance in Mongolia that recently completed fieldwork. Although analysis is ongoing, with full results expected in July of this year, data from the baseline is already providing interesting insights. Dr. De Haas points out three particularly interesting stats: . . .
1. Almost half of the women in the study, who were identified to participate specifically because they were in need of access to finance, already had loans at the time of baseline. (46%) . . .
2. Most women have long term debts-the majority of loans reported had been taken out in 2007-2008. . . .
3. The majority of this debt (70-80%) was reported to have been spent on consumption, not business activities. . . .
Read MoreResearch on charitable giving by IPA President Dean Karlan and Research Affiliate John List is mentioned in Ian Ayres' review of the new Superfreakonomics... . . .
Read MoreIt is a difficult and not particularly fruitful debate when different sectors important to economic development are pitted against one another in the quest for donor attention. Lasting development progress usually encompasses many areas, and debates that fail to recognize this are often just distracting. Some of the more interesting (and no less heated) debates are waged once a specific sector of focus or growth constraint has been identified. . . .
For example, once we have decided that education is crucial, how do we act upon this decision? . . .
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