Financial Decision-Making, Poverty, and Inequality Workshop

Agenda | Panelist Biographies


The "Financial Decision-Making, Poverty, and Inequality" workshop held on May 21 and 22, 2014, was a collaboration between IRP and the Center for Financial Security (CFS) designed to bring together researchers and practitioners for a focused conversation about how household financial management and access to financial assets, loans, transactional accounts/products can serve to support (or impede) families in their goals to be financially secure. A goal was to help researchers better understand how programs operate "on the ground" as well as better describe the context families in poverty face in retail financial markets. We also wanted to generate insights and spur innovations among providers of programs serving low income families to include interventions aimed at financial access and asset building. The ultimate goal was to facilitate an evidence-based conversation across sectors and disciplines. An issue of Fast Focus summarizes the workshop discussion and findings.

The event began with a presentation from Jonathon Morduch from NYU on the ongoing Financial Diaries project. This breakthrough study provides a "deep dive" over more than a year into the lives of low-income families. The workshop featured four panels, each of which had a researcher, a program leader, and a funder or policymaker. The goal of each session was for each panelist to offer no more than 10 minutes of high-level insights or background, followed by 60 minutes of moderated discussion led by the session leader. Organizers actively encouraged conversations across panels to enable themes to emerge. They also depended on an open dialogue and broad participation among all 35 or so people at the workshop. Motivational questions included:

Panel 1: Emergency Savings

  1. What is the role of unrestricted liquid savings? Why does it matter for low-income families?
  2. Does access to liquid savings help or hinder inequality? Does regulating away liquidity (or asset limits) exacerbate inequality?
  3. How can very low-income people be expected to maintain a cushion? What alternatives exist? How can programs better support holding some savings reserves? What innovations in programs or financial markets are needed?

Panel 2: Credit & Liquidity

  1. Credit access has expanded in recent decades—why does this fact matter for low-income families?
  2. Does access to credit liquidity help or hinder inequality? Does regulating away liquidity (credit regulation) exacerbate inequality?
  3. What role do formal or informal markets play for low-income families related to obtaining credit? What innovations in programs or financial markets are needed?

Panel 3: Technology

  1. Low-income consumers are using mobile technology and stored value cards at a high rate—is this a class divide? Will this result in long-run financial exclusion?
  2. Given the prominence of public benefits and the types of employers where low-income people work, how will the use of financial technologies change in the next few years?

Panel 4: Policy

  1. Is there a market failure—if so, what is that failure?
  2. Is it true policies are behind the curve related to asset building and financial capability promotion? Who are the leaders (and why)?
  3. Can we legislate financial literacy or capability? Who should pay for increasing financial capability?
  4. What are promising small-scale program innovations? What strategic large-scale policy pivots could be ahead?