Can behavioural science help Madagascar’s mothers save and invest?

With "nudges", a new program aims to encourage mothers to save for young kids' education

For many young mothers in Madagascar — where 70% of the population lives on less than $1.90 a day — knowing what to spend money on means choosing which priority is the most urgent. Though many mothers want to save money to invest to build the conditions for future wealth, or to pay for school fees for their children, too often the need to survive gets in the way.

To help young families to save, and get more young children educated in the crucial early years of their lives, the government of Madagascar is now turning to behavioural science.

With carefully targeted “nudges” — interventions designed to encourage young mothers to focus on the long to medium term and savings — it hopes to improve the success of two of its existing cash transfer programs, and provide the conditions for families’ long term wealth.

On one condition

By paying people on low incomes direct cash handouts, cash transfers aim to help raise people out of poverty while also achieving a social good, such as getting more children into school, or convincing people to go to health clinics.

Since their emergence in the 1990s, such programs have grown in popularity: as of 2015, every country in the world had at least one in place.

As a “social safety net”, they allow governments to reduce poverty levels and help their poorest citizens to access basic amenities. In Brazil, where income inequality fell by 15% from 2003-13, the government attributed a third of this to its Bolsa Familia cash transfer program.

But, while simple in theory, in practice, these programs remain difficult to get right. Monitoring and enforcing conditions costs money and time, which many governments in the developing world are short of. It’s meant that many have made their cash transfer programs unconditional, and led them to search for other ways to help people spend the money well.

But Madagascar has made its cash transfer programs conditional.

Via the human development cash transfer program (HDCT), the government pays young female heads of households cash every two months, provided their children attend school (for families with children under the age of six the payments are unconditional).

Meanwhile, through the productive safety net program (PSNP), they pay families sums for them to invest in long-term assets.

In 2015, the World Bank began working with the behavioural science non-profit, ideas42, to adapt these schemes.

“Often it’s the process more than the intervention itself”

The idea was, through carefully designed and targeted psychological interventions, or “nudges”, the beneficiaries could be convinced to look beyond the short term, and save money for important investments that can help raise them out of poverty.

For Josh Martin, vice president at ideas42, adding behavioural science to the programs allows government to control the outcomes without having to go through the onerous and expensive process or monitoring the conditions.

In practice, this means encouraging the women to focus on what they want to do with the money before they receive it. As they go to collect it, the women meet together in groups to discuss what they’ve achieved with previous payments, and what their goals are for the next installment. They’re encouraged to draw what they want to spend it on, and share this with others.

As well as encouraging saving, this pushes the women to think of themselves as independent economic actors. In a country where men are often absent through work, it falls to women to manage the household and the families. As of May 2017, 70% of cash transfers were being paid to the female head of the household.

This approach, said Tina Razafinimanana, a senior program manager at Ideas42, “really speaks to the local realities around gender norms, women’s role in the society, how it’s important for women to recognise their worth within the family and really play a more active role in the wellbeing of their children”.

Behaviour change

Behavioural science teams in governments around the world emphasise the importance of experimentation. By setting up controlled experiments, where nudges can be trialled, tested and refined, the project team moves ever closer towards a watertight and effective intervention. “Often it’s the process more than the intervention itself,” said Martin.

It’s not easy to get governments on board. Opposition to the idea of cash handouts often puts pressure on the team to gather extensive and watertight evidence. In order to show the effect of the intervention, it also requires them to conduct a randomised controlled trial, which necessarily requires some people get left out of the scheme. “That was a challenging sell for the government,” said Martin.

The experiment is currently at its midpoint, and showing signs of success. “The nudges improve upon the effects that we see from the other elements of the program, but in particular the mother-leaders component,” said Martin. “they add value across a wide range of human development behaviour — things like buying more nutritious food, [or] spending more time with the kids.”

Other effects, such as the cognitive development, will take longer to track. But one of the benefits is that public servants themselves, who have been working closely to implement some of the changes, have adopted some of experimental techniques themselves.

“They’ve already taken the decision to scale these interventions to other programs — they’ve customised and adapted them,” said Martin. According to ideas42, that willingness to experiment is the strongest marker of success. — Anoush Darabi

(Picture credit: Flickr/Tsung-Yen Lin)

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