•
In mid-June the Stanford Social Innovation Review blogged the results of a survey they conducted. The survey’s purpose: to understand the role of academic research in the work of practitioners in a broad range of social, environmental and economic issue areas. Many of the 1,800 respondents described academic research as difficult to access, expensive, too narrow, and not relevant...
Read More
•
More than 200 alumni, students, faculty, staff, donors, and friends of NYU Wagner celebrated the school's 75th anniversary on Thursday, June 12. The celebration began with faculty presenting their research highlights, or "WAGTalks." FAI's Jonathan Morduch kicked off the series with an overview of the US Financial Diaries (USFD) project and its relevance in today's current economic debates...
Read More
•
What does it mean to live between poverty and the middle class? In a multi-media report released last week, Al Jazeera America digs into the lives of 5 Californian families that "earn too much to receive most government benefits yet too little to reliably make ends meet."
The piece profiles families with income below the self-sufficiency standard, a measure developed by the University of Washington in the 1990s. The self-sufficiency standard . . .
Read More
•
Last week the New York Times highlighted a trend among low-income communities: people seeking tax prep at unregulated, sometimes fraudulent, pop-up shops. The article explains, "for millions of low-income Americans tax season means the biggest one-time influx of money all year." When preparers hand these customers a lump sum much larger than they're used to seeing on a daily basis, many filers don't think to check the numbers...
Read More
•
Two weeks ago I attended a Payments Bootcamp put on by Glenbrook Partners (a 2-day class they hold several times a year) to learn more about how the payments industry works behind the scenes. There is a lot to learn. Two days allows more than just scratching the surface, but not much more. While the class is focused on the payments infrastructure in the United States particularly, the material illuminates the evolution of mobile money and digital payments in the developing world...
Read More
•
Last month brought a flurry of opinions on postal banking in response to a new proposal that the US Post Office offer financial services – including bill-pay, check cashing, even small loans – to the “financially underserved.” Reactions have ranged from enthusiastic to deeply skeptical. This post highlights two key questions that have been posed and synthesizes some of the answers offered up so far...
Read More
•
No consumer likes overdraft fees. Overdraft fees are often unexpected, expensive, and in some cases undeserved. What’s more, they can wreak financial havoc on households living on a low-income.
But the larger issue is not the fees themselves. It’s the lack of transparency surrounding them and the widespread consumer distrust that results...
Read More
•
There’s a nice post on payday loans by New School professor Lisa Servon on the New Yorker Currency blog this week. She tells the story of Azlinah Tambu, a single mother in Oakland, CA who took out a series of payday loans, knowing she wouldn’t be able to pay them back on time and will end up repaying far more than she borrows. There’s no question Tambu is as informed a consumer of these types of loans as you could find: she has worked as a teller for a payday lender. In relating Tambu’s struggle to repay, Servon makes two really important and related points...
Read More
•
The Taylors overdraft their checking account every two weeks, on purpose.
As described in a recent issue brief published by the U.S. Financial Diaries, the Taylor family’s income level varies significantly from month to month. Sometimes it’s not enough to cover all of their expenses. So, they opened an account at a bank with a simple overdraft fee structure: One $35 charge per overdraft, no daily fees, and an allowance of up to $500 at a time. Since the Taylors typically make only one large cash withdrawal per paycheck – the entire amount of pay – this bank would charge them at most one $35 overdraft fee each cycle, if they happen to need more cash than the amount of that week’s direct deposit...
Read More
•
“Wow, the consumer knows about that?”
This was essentially how a banker responded when I told him the story of a woman I interviewed for the US Financial Diaries study. The participant – we’ll call her Jenna – was charged four $32 overdraft fees in the same day ($128 total, if you’re counting). Jenna explained to me that if her bank had processed her transactions in the order she had made them, there would only have been one charge. Instead, the bank posted her largest purchase first, which was enough to take her account balance below $0...
•
As a field researcher collecting data for the US Financial Diaries project in Cincinnati, I interviewed 30 low-income families about the details of their household finances over 16 months. One question was always in my mind: What’s the difference between their financial lives and mine? And how might this comparison help design financial products for people who are struggling to make ends meet?
Read More
•
Buried at the bottom of Shaila Dewan's recent New York Times article on "Microcredit for Americans" is an idea that deserves much more attention:
"Grameen helps its clients in another way that many experts say is more important than increasing income — it establishes good credit scores. Many poverty alleviation groups have shifted their focus from saving to credit building, because people with poor or no credit must leave large deposits for basic needs like utilities, have trouble renting decent housing, pay much higher interest rates and have a harder time finding jobs...Read More
•
At FAI, we’re big advocates for data. Why? Because you can’t make good policy without data. Data can be collected in many ways and come in many forms: transaction records, panel surveys, financial diaries, or field experiment results. We get excited about the opportunity to collect or analyze data about the financial behavior of poor households...
Read More
•
We’ve become fans of talking about financial literacy here at the Financial Access Initiative, so I was excited to see the May issue of the American Economic Review with selected papers from the American Economic Association’s Annual Meeting. There are four papers that address financial-literacy questions. I’ll offer some big-picture thoughts further down, but first, the punch lines of the four papers...
Read More
•
In Part 1 of this two-part video, Principal Investigator Jonathan Morduch describes the USFD research agenda. In Part 2, Morduch explains why the researchers will be using the financial diaries approach, a methodology which was successfully applied in Bangladesh, India and South Africa...
Read More