A few memorable comments made by Eldar Shafir during his morning keynote to the audience at CFSI's 2014 Emerge conference:
Conditions of scarcity cause people to make poor decisions. Scarcity leads to an impact on your actually cognitive capacity. Poverty is
one example of an external force that has this power. At its most basic spirit, people make the same decisions but when faced by different contexts, they make different decisions of differing judgment.
Scarcity influences our relationships with other people. He suggested that there is a critique out there which says that poor people do not do as good of a job as others in being attentive to their children. He says that the story is slightly different. Poor people might be bad parents because they live in conditions of scarcity. But again, it is the context: busy people who are time-constrained can exhibit the same habits. It is also the case that a good parent can be a bad parent on any particular day, especially when they come home from a hard day at their job. He mentioned a study on how air traffic controllers parent. Air traffic controllers tend to have a random distribution of good and bad days based upon external factors: traffic, weather, et al. On bad workdays they were not as attentive to their kids.
People make the wrong decisions with money for some of the strangest reasons. He referenced an experiment where regular borrowers in Africa were offered a heterogeneous set of loans. They could accept or reject loans, but any particular borrower may have seen a different loan offer than others within the same survey population. Notably, the disclosure differed as well. The question: would different disclosures influence a randomized set of people to differ in the types of loans they accepted. Would some take loans that were not as good? The interest rates ranged between 3 and 12 percent per month. Some people got a simple disclosure table, others get a complicated table. Some got one with a picture of a man in the bottom right corner of the poster. Others saw one with a picture with a woman. Some of the posters had no picture at all. Well, it turned out that when men saw a disclosure with a picture of a female, they were willing to borrow at terms that were not as good. They were willing to pay 4.5 percentage points more per month.
Sometimes a bad disclosure can change the course of someone's life. Applying for a federal student loan can be the first step in improving the trajectory of a person's life. But to do that, you have to fill out a FAFSA. Shafir said that people complete an application only 30 percent of the time. The problem is that application is way too complicated. Naturally, completion is much more common when people have help. Matriculation in college goes up 25 percent when people get a pre-filled out form. Bandwidth limitations are enough to make a difference in people’s educational achievement.
Conclusion: if you making it easier to bank, more people are likely to do it. If you give them a bandwidth gift, they are likely to improve other aspects of their lives.