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Econ 366 final exam Questions Solved 100% Correct | Verified Solutions 2024/25 Update
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Econ 366 final exam Questions Solved 100% Correct | Verified Solutions 2024/25 Update
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Econ 366 final exam Questions Solved 100% Correct |Verified Solutions 2024/25 Update
ROSCAs - ✔✔Rotating savings and credit associations. Group that has regular meetings
where members are committed to bringing a certain amount of money. It is pooled and then
given to one individual. Every benefit except the last: This means everyone can save faster by
pooling in a group than the last individual to receive the money → they are just as well off as
saving by themselves. Social responsibility of saving your money to help others and yourself,
People depend on you.
ROSCAs (risks) - ✔✔No interest
No assurance members will pay
Uncertainty as to when you will receive the money
ROSCAs in Kenya: Gugerty (setup) - ✔✔Purchasing an invisible durable good. Protect against
idiosyncratic risk. Intertemporal trade → you can save faster with a group if you're everyone
but the last to get the pot. Public commitment to saving. Most individuals acknowledge their
self-control problems. 70 ROSCAS in rural Kenya. The study was done in a rural agricultural
section of Kenya that borders Uganda. ROSCAs are mainly run by women and self-help groups
ROSCAs in Kenya: Gugerty (results) - ✔✔Determined that individuals want to join ROSCAs
due to their self-control problems
Economics of ROSCAs Nairobi, Kenya: Anderson and Baland (setup) - ✔✔520 households in
the slums of Nairobi. In the sampled ROSCAs most payouts were predetermined and the group
generally stayed together after the cycle. Want to determine why women join ROSCAs so
frequently
Economics of ROSCAs Nairobi, Kenya: Anderson and Baland (results) - ✔✔If women prefer a
higher savings rate than the household savings rate then they will choose to use a ROSCA →
most likely in secret. Women spend money on HH. Men spend on themselves. More a woman
makes=more power in HH. Upsidedown U of participation: women with no/low income do not
, participate as they have no money to contribute. Women use ROSCA to shield income. As
income increases, ROSCA participation increases, but then they reach a point where they are
powerful enough not to be in the ROSCA.
Mircoenterprise development in Kenya: Dupas and Robinson (setup) - ✔✔Does having
limited access to formal saving services impede business growth in poor countries? No one is
too poor to save (ROSCAs). If people take up formal savings treatment with a negative interest
rate, then formal saving is better than informal. Looks at female vendors who sell fish.
Mircoenterprise development in Kenya: Dupas and Robinson (treatment) - ✔✔offer to pay
the opening fee for savings account. Withdrawal fees exist, making it a negative savings rate.
Mircoenterprise development in Kenya: Dupas and Robinson (results) - ✔✔Very high uptake
(91.7%) but 40% of people who opened an account didnt deposit once. we see two broad
explanations for why market women in our sample could not save enough without formal
savings devices. First, these women may have present-biased preferences, and thus may be
tempted to spend any cash that they hold
They also could have claims on their income, from family expenses neighbors, or husband.
Helped the women who used it, didnt help daily income earners (bicycle taxi drivers)
Poor save more?: Dupas and Robinson (setup) - ✔✔Trying to encourage people to save more
for preventative health products, and health emergencies and reach a baseline savings goal.
Poor save more?: Dupas and Robinson (Treatment) - ✔✔Lockbox → people do not have the
key, they can only open it when they have reached a savings goal
Safebox: people do have a key → they can withdraw whenever they please
Health Pot: Apart from the ROSCA dedicated to preventative health products
HSA (Health savings account): Also a part of the ROSCA → save funds with ROSCA leader -
earmarked. Preventative (safebox, lock box, and health pot). Emergencies (safebox, HSA)
earmarking - ✔✔funds can only be used for a specific purpose determined beforehand
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