By Genevieve Melford, “Behavioral Economics and Microfinance” session panelist.
At its core, microfinance is about empowering low-income people, through access to small-scale financial products and services, to improve their financial condition. Insights from the study of behavioral economics have a lot of value to add to the practice of microfinance. They help us understand how people make decisions, and the way that the immediate context of their decisions guides financial behavior, and can even undermine the ability to meet financial goals. Armed with this knowledge, we can design products, systems, and financial regulations that meet people where they are, and therefore have the potential to support their financial success in much more significant ways.
A few weeks ago I had the pleasure of introducing and moderating a session on Behavioral Economics and Microfinance at the 2010 Microfinance USA conference. As readers of this blog likely already know, there are myriad ways that insights from the behavioral sciences can apply to everyday life, and to financial decision making. We chose to focus the session on behaviorally- informed interventions to affect savings and borrowing decisions, two of the building blocks of personal financial management and opportunity, and key areas of interest for the microfinance field….
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Genevieve Melford is a Senior Program Manager for Applied Research at CFED, where she leads the organization’s applied behavioral economics work.