But I Know, Change (Not) Gonna Come

So a huge, huge, huge peeve of mine is when I try to buy something/pay for a service here in Kenya (though I would imagine it’s true throughout the developing world) only to discover that the seller doesn’t have change. I receive my salary in the form of 1000s (about $12), so I often don’t have smaller bills, and frustratingly, neither do the vendors. I’ve now learned when taking cabs/”pikis” (motorcycles) anywhere, it is absolutely essential that we both establish how much change we have ahead of time, to avoid issues at the end.

Enter basically my favorite study ever (and that’s saying something):

Jon Robinson, a researcher at UC Santa Cruz who has done work in Kenya, found a similar problem during his time here. He decided to investigate the matter more. He found that micro-enterprises were losing about 5% worth of their sales in a given week due to being unable to complete the exchange due to a lack of change. Furthermore, they spend an average of two hours a week looking for change from other vendors (the “I’ll borrow the change from you now, and pay you back later” approach).

He had two sorts of interventions, both of which were quite simple. In Treatment One, he gave people a survey, which forced them to think about their issues with change—he calls instances where they don’t have change, and accordingly lose a sale, a “changeout.” So he asks them: “How many times did you have changeouts in the past week?” “How much did these changeouts cost you?” “How much time did you spend looking for change?” “Each day, how many bills and how many coins do you bring to work?” Basically his questions made them cognizant of issues due to change.

Treatment Two was effectively saying, “Dude, you should really have change.”  He suggested to people that they just make an effort to bring change that is in fact readily available. Unlike in Zimbabwe, where there actually aren’t enough coins, in Kenya the issue just seems to be a lack of attention to “no-change” issue. And sure enough, his treatment was quite successful—there were 30% less changeouts when people took the “think about change” surveys or when they were told to have change. Furthermore, profits increased by 12%, and people said that they had changed their behavior, for instance by getting change at the end of each work day, so they’d be loaded up on change for the next day.

This is the sort of intervention that really inspires me, and makes me think that some issues with poverty are so imminently solvable. It also combines two passions of mine within development: micro-enterprise and psychology. In my mind, there are two major concepts that are underserved by current development research: micro-enterprise profitability and human behavior. So much of the developing world either works for themselves or has just a few employees, whether it’s the person running a mobile phone kiosk, selling sunglasses on the street, or working as a taxi. A tremendous way to help a large part of the population is figuring out how they can improve their profits—what parts of their businesses are consistently inefficient. Second, any interventions that try to change human behavior should look at how humans ACTUALLY behave, rather than how an abstract model predicts they SHOULD. This experiment simply and elegantly improved profits of individuals by revealing a lack of attention to an important area.

And now, when I complain to a vendor about not having change, and tell him he really should in the future, I can tell myself I’m doing a public service.

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3 Responses to But I Know, Change (Not) Gonna Come

  1. Alison says:

    This is great! Maybe the change conundrum is an issue that we will see solved in our lifetimes, Nanyuki. I believe in you

  2. Agatha says:

    This is a great study!! Thanks for sharing. I find that when developing solutions to problems in our communities human behavior is either an after thought, or out not considered at all. I find it extremely frustrating, and I love that you’ve brought attention it. I’m looking forward to reading more blog entries about how mirco-enterprise and psychology intersect!

    • nate0316 says:

      Thanks! I agree completely–my expectation is that psychology and behavioral economics applied to international development is going to be one the single biggest advancements in the development field going forward.

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