Changing behavior with social and financial incentives

45 million bracelets

The social opportunities of this conference

Prof Anirudh Krishna Duke University How do people come to be poor? How do people escape from poverty? More: www.pubpol.duke.edu/krishna

How do people come to be poor?

How do people escape from poverty?

The Good News… More: www.pubpol.duke.edu/krishna N > 35,000 households (mostly villages) Escaped Poverty Rajasthan (35 villages) 11% Gujarat (36 villages) 9% Andhra (36 villages) 14% W. Kenya (20 villages) 18% Uganda (36 villages) 24% Peru (20 communities) 17% North Carolina (13 communities) 23%

… The Whole Story More: www.pubpol.duke.edu/krishna N > 35,000 households (mostly villages) Escaped Poverty Became Poor Change Rajasthan (35 villages) 11% 8% 3% Gujarat (36 villages) 9% 6% 3% Andhra (36 villages) 14% 12% 2% W. Kenya (20 villages) 18% 19% -1% Uganda (36 villages) 24% 15% 9% Peru (20 communities) 17% 15% 2% North Carolina (13 communities) 23% 12% 11%

Findings! HUGE flows in and out of poverty Constant creation -> persistence, some exits 1/3 of people not born poor But why did changes occur? More: www.pubpol.duke.edu/krishna

HUGE flows in and out of poverty

Constant creation -> persistence, some exits

1/3 of people not born poor

But why did changes occur?

Reasons for descent BAD HEALTH AND HIGH HEALTH CARE EXPENSES 59% in Rajasthan; 73% in W. Kenya; 88% in Gujarat; 77% in Uganda; 75% in Andhra; 67% in Peru; 41% in North Carolina Other location-specific reasons: Social and customary expenses; high-interest debt; crop disease, land exhaustion, drought; job loss More: www.pubpol.duke.edu/krishna

BAD HEALTH AND HIGH HEALTH CARE EXPENSES

59% in Rajasthan; 73% in W. Kenya; 88% in Gujarat; 77% in Uganda; 75% in Andhra; 67% in Peru; 41% in North Carolina

Other location-specific reasons:

Social and customary expenses; high-interest debt; crop disease, land exhaustion, drought; job loss

Reasons for poverty escape Diversification of Income Sources : Agriculture and Informal Sector (70% Rajasthan, 73% W. Kenya, 79% Uganda, 71% Andhra, 69% Peru, 70% Gujarat) OTHER REASONS (much less frequent) Jobs – in Government and Private Sector More: www.pubpol.duke.edu/krishna

Diversification of Income Sources : Agriculture and Informal Sector

(70% Rajasthan, 73% W. Kenya, 79% Uganda, 71% Andhra, 69% Peru, 70% Gujarat)

OTHER REASONS (much less frequent)

Jobs – in Government and Private Sector

They got other jobs How? They knew someone …. “ Availability of an external contact, a friend or more often a relative already established in the city, was critical in (64% cases from Rajasthan) for a households’ successful break from poverty.” - 2003 Krishna “Escaping Poverty and Becoming Poor: Who Gains, Who Loses, and Why?”

How? They knew someone ….

“ Availability of an external contact, a friend or more often a relative already established in the city, was critical in (64% cases from Rajasthan) for a households’ successful break from poverty.”

- 2003 Krishna “Escaping Poverty and Becoming Poor: Who Gains, Who Loses, and Why?”

A quote… I am educated [to high school level] and eager to get a job in the city, but I have no way of knowing what jobs exist. I have no one in the city who can find out and tell me… I wish I had an uncle or a cousin in [the nearest city], who could help me, just as Gopi Singh’s brother-in-law helped him to find a job. - Pratap Singh, village Khatikhera, district Bhilwara, May 16, 2002.

I am educated [to high school level] and eager to get a job in the city, but I have no way of knowing what jobs exist. I have no one in the city who can find out and tell me…

I wish I had an uncle or a cousin in [the nearest city], who could help me, just as Gopi Singh’s brother-in-law helped him to find a job.

- Pratap Singh, village Khatikhera, district Bhilwara, May 16, 2002.

Driver tells Employer and Employer hires cook. The Driver asks his friend if she knows any cooks. His friend knows a cook and tells the driver. Employer needs a cook and asks her driver Many jobs are found through word of mouth.

Driver tells Employer and Employer hires cook.

The Driver asks his friend if she knows any cooks.

His friend knows a cook and tells the driver.

Employer needs a cook and asks her driver

A Story of 2 Nannies Mary Edu: 5 th standard Speaks only Kannada Earns $20/month Only knows people in slum Jeena Edu: 5 th standard Speaks Kannada, Hindi Earns $170/month Has sister who works for a rich family

Mary

Edu: 5 th standard

Speaks only Kannada

Earns $20/month

Only knows people in slum

Jeena

Edu: 5 th standard

Speaks Kannada, Hindi

Earns $170/month

Has sister who works for a rich family

Other job sites help high end workers – even connect to social networks

90 minute commute distance 2001 2008 2011

Poor people don’t use computers And many don’t have phones But wait:

Poor people don’t use computers

And many don’t have phones

Do it Ourselves Small teams into the slum – not scalable? Radio/TV ad with phone-in number Create business model for partners iCafes, NGOs, Micro-Finance cos. Charge seeker Rs 20 + Earn Rs 200 when hired How we digitize job seekers: 3 models

Do it Ourselves

Small teams into the slum – not scalable?

Radio/TV ad with phone-in number

Create business model for partners

iCafes, NGOs, Micro-Finance cos.

Charge seeker Rs 20 + Earn Rs 200 when hired

Payment example 1: Mentors Job Seekers Employers NGO MFI

Do it Ourselves Small teams into the slum – not scalable? Radio/TV ad with phone-in number Create business model for partners iCafes, NGOs, Micro-Finance cos. Charge seeker Rs 20 + Earn Rs 200 when hired Via Social Networks Orkut, babalife, FB users register job seekers Mentors + connectors paid How we digitize job seekers: 3 models

Do it Ourselves

Small teams into the slum – not scalable?

Radio/TV ad with phone-in number

Create business model for partners

iCafes, NGOs, Micro-Finance cos.

Charge seeker Rs 20 + Earn Rs 200 when hired

Via Social Networks

Orkut, babalife, FB users register job seekers

Mentors + connectors paid

My homepage

Changing human behavior through: Financial incentives – mobile top-ups for 3bn people Social incentives – how do their friends see their action? Creating market efficiency for the poor Aggregate data with websites Connect to poor w/ mobiles + on-the-ground networks (kiva.org) Take-aways

Changing human behavior through:

Financial incentives – mobile top-ups for 3bn people

Social incentives – how do their friends see their action?

Creating market efficiency for the poor

Aggregate data with websites

Connect to poor w/ mobiles + on-the-ground networks (kiva.org)

Sean Blagsvedt [email_address] Thanks

Sean Blagsvedt

[email_address]

Employer Payment example 2: Employee Connector Mentor 1. Sean starts out as a simple babalife user 2. Sean adds friends on babalife or adds app on orkut/facebook 3. Sean needs to hire someone and pays babajob Rs 599 ($16) to see mobile #s or post a job 4. Sean searches and later clicks ‘I hired Selvi’. 5. We see that Kumari is the connector between Sean and Selvi. Earns Rs 100. 6. Kumari is also the mentor who registered Selvi on babajob.com. Earns another Rs 200

Employer

Stages of Progress (Rajasthan) More: www.pubpol.duke.edu/krishna 1. Food for the family 2. Send children to school 3. Some clothes to wear outside the house 4. Start repaying debts 5. Repair the existing shelter 6. Dig a well 7. Purchase cows and buffaloes 8. Construct a pakka (brick) shelter 9. Purchase ornaments 10. Radio, tape recorder, refrigerator 11. Motorcycle 12. Tractor, car Poor Not Poor Rich

Employer Babajob payment example # 2 Employee Connector NGO Mentor Connector

Employer

Beta-launched Sept 2007. Bangalore-only 10,500 registered users 4500 active job seekers ~150 placements + paid employers India-wide launch + social network launch – late April Babajob summary

Beta-launched Sept 2007. Bangalore-only

10,500 registered users

4500 active job seekers

~150 placements + paid employers

India-wide launch + social network launch – late April