I love misbehavior.
Don’t get me wrong. I grew up one of the most compliant kids you’d know, and I’m no advocate for breaking rules. But I’ve come to appreciate how much can be learned by paying close atte
ntion to “misbehavior.”
Of course, I wish nobody spent the proceeds of microfinance loans to buy cigarettes or alcohol, but as we are often reminded by writers on financial behavior, money is fungible. Microfinance fosters agency building, so we need to honor the rights of different people to choose to spend money on what they deem valuable.
But should providers assist clients by providing options that they can “misuse”?
My view is that service providers should not only respect, but also listen to those choices. When outsiders disregard choices we deem “bad,” or merely tolerate as someone’s right, then we miss opportunities to discern how needs might really be assisted through financial intermediation (or in any way). I’d be worse off if companies just derided American obesity and missed business opportunities to make gyms more appealing or create new product lines like Coke Zero or Pepsi Max to satisfy my sweet tooth. By better understanding good and “bad” choices, providers can offer more meaningful help.
Principles from autism therapy
Our son Xavier has autism, a disability that can close off children from the world and make their thoughts a mystery. When he was about four, at home with a babysitter, Xavier went up to his room, pulled out a marker and scribbled all over the carpet. The babysitter spent hours scrubbing in vain. When I got home, she was quite surprised that I greeted the news with joy! Xavier had been working for several weeks to hold a pencil and move his hand back and forth. This “misbehavior” represented Xavier’s first enjoyment of arts and crafts and an independent application of what he was learning in therapy. Who cared how bad the carpet looked? This was the most beautiful stain I had ever seen, and I still smile every time I see it.
My son’s autism therapy has taught me to learn from “misbehavior” and celebrate the insight gained rather than to focus on chastening. Xavier’s therapists approach any act that’s undesired as a light shining into an unknown realm of thoughts and motivations. We can use that knowledge to alter the environment and our interaction so that we’re offering what’s most motivating to build the skills it takes to navigate the world. For example, if a child keeps shouting in protest or walking away from therapy, instead of exerting control, therapists watch what they’re walking to or what they quiet to, and then offer that whenever they practice new skills. Although it’s an imperfect analogy, there’s much we don’t understand about the lives of people in poverty, so both interventions share this principle: they learn from all behaviors in order to design tools that support life improvements in ways that appeal to a client’s or child’s own desires.
The paternalism inherent in children’s therapy can easily be avoided in designing financial services. The book Nudge details how choice architecture like adjusting status quo defaults can support adults while still providing 100 percent freedom. The marketers in Up and Out of Poverty: The Social Marketing Solution employ the same discipline used in swaying our TV show selections to investigate and capitalize on interests that could help influence other choices that improve lives.
Applying autism “misbehavior” lessons to microfinance
So instead of lamenting microloans used for consumption, let’s celebrate the lessons learned. Maybe we’ll learn how parents could see paying school fees as an “investment in a productive asset.” Maybe by attuning our ears to clients we’ll notice that marriage celebrations are meaningful community engagements worthy of lavish hospitality. Removing judgment about creative misappropriations of the only financial tool available could spur microfinance to find ways for clients to save more safely for “big ticket” life events.
I’m thrilled by the empowerment of women that can happen through microloans, so I was initially dismayed to learn that some clients “game the system” by handing over their microloans to their husband’s businesses. But stricter enforcement won’t empower women. Instead, MFIs should learn about the contextual barriers and try to help more effectively. It’s vital to stay intentionally focused on serving the real needs of women, and to that end, let’s not limit ourselves with our a priori assumptions. It’s possible that by further increasing access to everyone the growth of income resulting from a husband’s business might actually free up a woman to use loans to start her own business.
While overindebtedness is a problem in saturated areas such that credit bureaus and the Smart Campaign’s Client Protection Principles are needed, how does that fit with one of the most common client requests: for larger loans? Are people unaware of the consequences of too much debt? Or are actual financial needs greater and more complex than microlenders are prepared to address with loans alone? Instead of compliance crackdowns, clients may prefer financial products that are as flexible as their cash flows are volatile.
Financial inclusion provides tools, and we need to respect the concept that people get to choose what they do with any tool. That very principle undergirds the power of microfinance at unleashing clients’ own ability to help themselves. And at the same time, we all can understand how some people might not spend every minute, choice, or penny for their health and upward mobility, but rather may choose to satisfy another immediate desire. That said, you can count on parents in poverty to work extremely hard to feed, cloth, house, and educate their children.
Once we respect clients’ right to choose, we can also treat their choices as valuable information about how they meet the struggles they face. When we suppress our natural instinct to judge, we can focus on the question “What can I do that’s supportive in addressing needs?” A perspective of gleaning insights rather than policing behavior will help MFIs design diversified tools that will be more appropriate to clients’ contexts and meet more important needs.
As Accion’s Senior Director of Corporate Partnerships and Adjunct Professor of Northwest University’s master’s course on sustainable organizations, Chris Wolff applies his business background to companies seeking to achieve business plus social objectives through “shared value” or corporate social responsibility.
Image credit: bloggingforautism.com
Have you read?
What Do We Really Know About Financial Behavior in Rural Areas?
How Does Educational Inclusion for Children with Disabilities Relate to Financial Inclusion?