ECON Professor, Student Work to Be the Solution in East Africa

When senior economics major Sarah Lord enrolled in Assistant Professor of Economics Jessica Goldberg’s ECON 416: Theory of Economic Development as a sophomore in the spring of 2013, she did not anticipate the impact the class would have on her future. Through conversations after class, Professor Goldberg and Lord realized they had something in common: their interest in economic development in Africa.

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Professor Goldberg was in the middle of conducting research in the East African country of Malawi, and Lord had always dreamed of going to Africa. Lord joined Professor Goldberg and her collaborators last summer in Malawi and helped them to conduct research on how certain social and cultural factors affect savings decisions and lack of savings. Lack of savings means that people are unable to make profitable investments or cope when they experience household emergencies; Goldberg, Lord and their collaborators are looking for ways to help even very poor people improve their livelihoods by increasing their savings. By partnering with Innovations for Poverty Action, a nonprofit focused on discovering and promoting effective solutions to global poverty problems, both Professor Goldberg and Lord are working to fulfill the College’s mission to Be the Solution to the world’s great challenges.

The main question that Professor Goldberg and Lord sought to answer through the research was “what keeps people from reaching the savings targets they’ve set for themselves, and what will help people reach their savings goals?” Their project was a randomized controlled trial that offered bank accounts to people living in villages in rural Malawi.  The research team conducted censuses of villages in southern Malawi, then randomly selected 500 people to receive bank accounts that were labeled with a personal savings goal. An additional 500 people were offered accounts that were not labeled, and another group were not offered any savings accounts but followed as a control group. During her summer stay in Malawi, Lord was actively engaged in gathering data from those selected to receive bank accounts through the use of a baseline survey. Among many other things, Lord learned “what getting data actually looks like” in the context of a research field, as well as how to clean and prep the data sets so that they could be effectively used in the study.

Professor Goldberg said being on site and working with the field team in Malawi was a great experience, and one that allowed Lord to “combine real-world intuition with economic theory,” a skill that has led to a better perspective when reading academic research and taking advanced economic courses.

The experience also was personally meaningful for Lord. “Living in one of the poorest countries in the world really gave me a different perspective,” she said.

The work in Malawi also led Lord to begin co-writing her senior thesis, with Professor Goldberg, on the reasons for dramatic price dispersion for similar items throughout the region. Both Goldberg and Lord agree that the thesis work, as well as good research in general, require knowledge of what day-to-day life is like in the targeted region, something that Lord was able to experience during her stay in Malawi.

While understanding that the developing country context required experience, economics was a natural fit for Lord.  She recalls taking her first courses in economics at the University of Maryland, and noted that the content really “clicked” for her–“this is the way I’ve been thinking about everything already,” she said.

Lord’s interest in the field, combined with her desire to make a difference, have led her to pursue graduate study in economics with a concentration in development after she graduates in May.

Professor Goldberg and her research team are still collecting data from the project.  Other questions that the study will address include how having personal aspirations, receiving financial literacy training, and receiving cash vs account deposits have different effects on individuals reaching their savings goals.  Results from a related study that shows big effects of savings accounts on investments and consumption already been submitted for publication, and the research team is eager to learn more about the mechanisms through which these accounts operate.

Recognizing both the significance and potential global impact of the research, and the enriching opportunity for Lord’s academic and future careers, the BSOS Office of the Dean was pleased to provide funding to cover Lord’s travel and make the experience possible, as other potential funding deadlines had passed. Lord said she is grateful for the generosity of BSOS donors, whose generosity makes it possible for the College to support this type of research and experiential learning.

Published on Tue, Sep 23, 2014 - 9:06PM