Empowerment Through Economics
Posted in News Story
October 9, 2012—Four Georgetown students spent their summer in Kenya and learned how they could apply their economics skills to real-world challenges.
Associate Professor of Economics Billy Jack has conducted extensive research in eastern Africa, particularly in Kenya. This summer, he sent Yun Ling, Lucie Parker, and Alec Villec, undergraduate College students, and Cindy Yang (F’12) to Nairobi to work on his current field projects. “We saw three projects in three different phases,” Alex Villec (C’13), an economics and government major, explained. Over the two months, the students saw how their economics knowledge could apply to a range of topics from road safety and maternal health savings to financial literacy for Kenyan teens.
Some of Professor Jack’s projects involve Kenya’s mobile banking network, M-Pesa, which has revolutionized finance in the country. M-Pesa accounts are keyed to telephone numbers and allow Kenyans to transfer money to another account with a text message. People can withdraw or deposit cash through any M-Pesa agent, just like an ATM. “The system is just a simple communication device,” Jack said. The network has significantly reduced the risk of transferring money, which used to mean a long bus ride or sending money through a friend. “Normally we think of innovation as cutting things down by 10 percent, M-Pesa completely altered the landscape of financial transactions,” he continued.
With over 70 percent of the adult Kenyan population using M-Pesa, Jack is researching how the system can help people in other ways. “This stuff has a discernible effect on people’s lives,” he said. His project on maternal health savings uses M-Pesa as a means to discover why some Kenyan women choose to not give birth in a health clinic. He hopes to identify the cultural or financial impediments to health care in a randomized study in Nairobi and the rural village of Vihiga.
“We’re basically asking which intervention, if any, delivered through the phone has the most influence on health care saving,” Cindy Yang (SFS’12) explained. Women are given financial or informational incentives to save for maternal health costs. “If we’re able to identify and prove where the missing link is in poor savings rates (Nairobi) or the lack of health care usage (Vihiga), there’s a possibility of being able to forge new policies and more funding for specific interventions,” Yang said.
As Kenya’s financial landscape rapidly changes, Jack is also studying financial literacy for high school students to “teach them basic concepts and attitudes about money.” Across 220 schools, students receive financial education in the classroom, through a comic book series, or not at all. Students are given $15 and the choice to spend, save, or invest it. By looking at the students’ behavior before and after instruction, Jack hopes to see if students learn about finance and the best way to provide that education.
For Professor Jack’s students, seeing these projects shed new light on how field research is accomplished. “The amount of labor and thinking behind the execution is incredible,” Yun Ling (C’13), an economics and mathematics major, said. The students were involved in each project: distributing education materials, interviewing bus drivers, cleaning data, and writing questions for surveys. “I’ll never look at data the same way and how that data is collected,” Villec said. “I have this new appreciation for what it entails,” he continued.
Funded through GUROP summer grants, the students never quite knew what type of work to expect. “There really was no typical day,” Ling said. But the work showed them what their skills in econometrics and randomization could do outside of the classroom. “I’ve seen the sorts of experiments you can run—anything from maternal health and road safety to child soldiers. This sort of field research can be applied to a million different things,” Villec said.
The trip also showed the students how their economic skills can affect change. “It was great to see how the projects can have profound implications and a positive impact on people’s lives,” Ling said.
During the summer, Jack joined the students for a week to take them on a safari and see the work they had done. He was impressed at how quickly they jumped into the projects. “They’re so enthusiastic. All they really need is the opportunity,” he said.