The Damage of Unexamined Assumptions

I'm subscribed to a few little newsletters and daily feeds - certainly not as many as some people I know, but enough to feel like I'm somewhat informed.  A "Daily Stat" from a Harvard Business Review landed in my in-box, loudly declaring as a header: "Even the Very Poorest Like Mobile Banking".

The stat was drawn from this article by the McKinsey Quarterly (registration required), which was a study was conducted in the Philippines and India with the eye toward ways to accelerate tapping into emerging markets. The article/study itself was useful, and to their credit the researchers did try to look at the "whys" of the situation (asking about reasons for "bank avoidance").  They looked at contextual factors involved in the "informal credit systems"  in place and drew reasonable conclusions about the impetus for such a system and the impacts on the members of that system. I think all that work and context got lost, though, when the article was selected by an editor.

Because the stat that arrived in my email was packaged as such (this is a direct quote) : "About 65% of the lowest-income households surveyed by McKinsey in the Philippines want to use banking accounts accessed through mobile phones — contrary to the accepted wisdom that poor people tend to be indifferent to banking."

**double take**

 "Poor people tend to be indifferent to banking".  Just... wow.  I mean, I know that "accepted wisdom" is often proven wrong but it seems like that statement (taken with the header that preceded it) is just dripping with assumptions and condescension.  

While the original article focuses on the Philippines and India, the lessons learned there can be equally applied to "very poor people" in US.  Contrary to the popular belief that America is the land of milk and honey, there is crushing poverty and "expensive informal credit systems" over here, too - just ask anyone who has taken out a payday loan.

Above all, the assumption that "being poor" = "doesn't care about money" (with the not-so-hidden subtext that poor people are just too stupid to know what's best for them) is just galling.  I will admit that this is a button-pusher for me, and that this has me livid.

Did it ever occur to the creators of "accepted wisdom" that poor people have to think about money on a regular, stressful basis just as much as - if not more than - rich folk do? That living paycheck-to-paycheck means tracking finances to a degree bordering on obsession?  That banking is indifferent to poor people?  That people who are working all the time don't have the luxury of taking time off to meet with their "friendly local banker" during banker's hours?  That some of the many hidden costs of being poor include NOT having access to lower interest rates, lower minimum balances, and easy access to financial information and the energy and time to make use of it?   

Quite simply, to put this in terms of program/policy evaluation:   it's a service utilization issue - and the banks have assumed it's because financial literacy isn't WANTED, not that they, as institutions, have made access difficult.  When in doubt, blame the customer, right?

While assumptions underlying the conventional wisdom are irritating, they are also damaging -not just to human sensibilities, but economically.  The failure of financial institutions to pay attention to the poor feeds into the poverty cycle which is damaging to the greater good.   But rather than appeal to the banks to look at the greater good, how about the pocketbook? 

Mobile banking makes depositing, saving, and managing money not only easy for the customer, but CHEAP for the financial institution!  It's outsourcing the work to the customer - and the technology exists and for many banks the systems are already in place - and how much cheaper can you get for that?  The more customers empowered to make better financial choices, the greater the wealth generated by those customers. And, in turn, the greater the wealth housed in the vaults of the banking institutions, so they can leverage them into greater fortunes (won't say for who, here).
 

I think the only reason mobile banking hasn't caught on yet IS because of that "accepted wisdom" assumption - and a  good example of why, each and every time an industry (or a government!) says "these people just don't seem to care" it's important to understand the behavior and then look at how that changes landscape.

(And this is my "rah rah Suffolk" moment for this post:  This program has made me appreciate the substantial overlap between the economic/financial realms and the worlds of government and psychology.  For someone who loves analyzing a situation down to the fundamental bits and then seeing not 0nly what's impacting those pieces, but how the bits-and-bigger-pieces can be applied somewhere else, there is no place I'd rather be.)

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