Changing behavior with social and financial

incentives

45 million bracelets

The social opportunitiesof this conference

Prof Anirudh KrishnaDuke University

• How do people come to be poor?

• How do people escape from poverty?

More: www.pubpol.duke.edu/krishna

The Good News…Escaped Poverty

Rajasthan (35 villages)

11%

Gujarat (36 villages)

9%

Andhra (36 villages)

14%

W. Kenya (20 villages)

18%

Uganda (36 villages)

24%

Peru (20 communities)

17%

North Carolina(13 communities)

23%More: www.pubpol.duke.edu/krishna N > 35,000 households (mostly villages)

…The Whole StoryEscaped Poverty

Became Poor Change

Rajasthan (35 villages)

11% 8% 3%

Gujarat (36 villages)

9% 6% 3%

Andhra (36 villages)

14% 12% 2%

W. Kenya (20 villages)

18% 19% -1%

Uganda (36 villages)

24% 15% 9%

Peru (20 communities)

17% 15% 2%

North Carolina(13 communities)

23% 12% 11%

More: www.pubpol.duke.edu/krishna N > 35,000 households (mostly villages)

Findings!

• HUGE flows in and out of poverty– Constant creation -> persistence, some

exits

• 1/3 of people not born poor

• But why did changes occur?

More: www.pubpol.duke.edu/krishna

Reasons for descent

• BAD HEALTH AND HIGH HEALTH CARE EXPENSES59% in Rajasthan; 73% in W. Kenya; 88% in Gujarat; 77% in Uganda; 75% in Andhra; 67% in Peru; 41% in North Carolina

• Other location-specific reasons:Social and customary expenses; high-interest debt; crop disease, land exhaustion, drought; job loss

More: www.pubpol.duke.edu/krishna

Reasons for poverty escape

• Diversification of Income Sources: Agriculture and Informal Sector(70% Rajasthan, 73% W. Kenya, 79% Uganda, 71% Andhra, 69% Peru, 70% Gujarat)

• OTHER REASONS (much less frequent)Jobs – in Government and Private Sector

More: www.pubpol.duke.edu/krishna

They got other jobs

• How? They knew someone….

“Availability of an external contact, a friend or more often a relative already established in the city, was critical in (64% cases from Rajasthan) for a households’ successful break from poverty.”

- 2003 Krishna “Escaping Poverty and Becoming Poor: Who Gains, Who Loses, and Why?”

A quote…

I am educated [to high school level] and eager to get a job in the city, but I have no way of knowing what jobs exist. I have no one in the city who can find out and tell me…

I wish I had an uncle or a cousin in [the nearest city], who could help me, just as Gopi Singh’s brother-in-law helped him to find a job.

- Pratap Singh, village Khatikhera, district Bhilwara, May 16, 2002.

4. Driver tells Employer and Employer hires cook.

2. The Driver asks his friend if she knows any cooks.

3. His friend knows a cook and tells the driver.

1. Employer needs a cook and asks her driver

Many jobs are found through word of mouth.

A Story of 2 Nannies

Mary• Edu: 5th standard• Speaks only

Kannada• Earns $20/month • Only knows people

in slum

Jeena• Edu: 5th standard• Speaks Kannada,

Hindi • Earns $170/month• Has sister who works

for a rich family

Other job sites help high end workers – even connect to social networks

20012001

20082008

2011

90 minute commute distance

90 minute commute distance

Poor people don’t use computersAnd many don’t have phones

But wait:

1. Do it Ourselves– Small teams into the slum – not scalable?– Radio/TV ad with phone-in number

2. Create business model for partners– iCafes, NGOs, Micro-Finance cos.– Charge seeker Rs 20 + Earn Rs 200 when

hired

How we digitize job seekers: 3 models

Payment example 1:

Mentors

Job Seekers

Employers

NGO

MFI

1. Do it Ourselves– Small teams into the slum – not scalable?– Radio/TV ad with phone-in number

2. Create business model for partners– iCafes, NGOs, Micro-Finance cos.– Charge seeker Rs 20 + Earn Rs 200 when hired

3. Via Social Networks– Orkut, babalife, FB users register job seekers– Mentors + connectors paid

How we digitize job seekers: 3 models

My homepage

• Changing human behavior through:– Financial incentives – mobile top-ups for

3bn people– Social incentives – how do their friends see

their action?

• Creating market efficiency for the poor– Aggregate data with websites– Connect to poor w/ mobiles + on-the-ground

networks (kiva.org)

Take-aways

•Sean Blagsvedt•Sean@babajob.com

Thanks

Employer

Payment example 2:

EmployeeConnecto

r

Mentor

1. Sean starts out as a simple babalife user2. Sean adds friends on babalife or adds app on orkut/facebook

3. Sean needs to hire someone and pays babajob Rs 599 ($16) to see mobile #s or post a job

4. Sean searches and later clicks ‘I hired Selvi’.

5. We see that Kumari is the connector between Sean and Selvi. Earns Rs 100.

6. Kumari is also the mentor who registered Selvi on babajob.com. Earns another Rs 200

Stages of Progress (Rajasthan)

1. Food for the family

2. Send children to school

3. Some clothes to wear outside the house

4. Start repaying debts

5. Repair the existing shelter

6. Dig a well

7. Purchase cows and buffaloes

8. Construct a pakka (brick) shelter

9. Purchase ornaments

10. Radio, tape recorder, refrigerator

11. Motorcycle

12. Tractor, car

Poor

Not Poor

Rich

More: www.pubpol.duke.edu/krishna

Employer

Babajob payment example # 2

Connector

NGOMentor

Employee

Connector

• Beta-launched Sept 2007. Bangalore-only

• 10,500 registered users• 4500 active job seekers• ~150 placements + paid employers• India-wide launch + social network

launch – late April

Babajob summary