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The Puzzle of Digital Financial Inclusion: A Generation Game?

If we thought that financial inclusion and its digital variant are tightly correlated, we may be in for a surprise, judging from the Global Findex 2017 microdata released by the World Bank last month. Owning a bank account (financial inclusion) and owning a mobile money account (its digital variant) throw a puzzling pattern. I plot the averages of bank account ownership and mobile money account ownership in 144 countries across groups of low to high incomes economies, showing a clear separating trend. The thought is borne by 25 low income countries with the two measures of financial inclusion strongly correlated at 0.7. But as income level steps up (to middle and high incomes level) bank account shares increase while mobile money shares decrease. The final panel is flat at the bottom right: most of the 44 high income countries have more than 80% bank account shares with less than 20% mobile money account shares. The correlation? –0.2. One explanation for this negative correlation can be discounted. The digital variant is not yet a substitute for a bank account: savers cannot yet use their mobile money account on its own or as a substitute to secure property or business investment. As countries move up the economic ladder, the puzzle of separation insists on an explanation.

 

Figure 1. The puzzle of bank account ownership vs mobile money account ownership (number of countries in parentheses) Source: calculated from Global Findex 2017 microdataaccXmobXgroup

I explore an alternative here. In high income economies financial inclusion is nearly universal among adults. Not so in low and middle income economies; on the demand side lower average incomes as well as lack of trust in banks coupled with, on the supply side, weak financial infrastructures combine to leave many adults financially excluded. But the costs of financial services, such as sending and receiving money, have been pared down thanks to mobile technology, especially in low income economies. In Uganda, transfers can be made cheaply and directly from the south west to the north east without recourse to Kampala in the centre.

First in this exploration I show a map of the uneven financial inclusion around the world (https://globalfindex.worldbank.org/ accessed 31 October 2018). Map 1 shows that financial inclusion varies along levels of development. The high income economies of North America, Europe, Australia and New Zealand, are homes to adults with the majority of them having a bank account. Moreover a financial inclusion gradient is discernible with economies around the equator, where many lower and middle income economies are located, reporting lower percentages of account ownership. In particular, available data from African economies in the Global Findex and on the map show how financial inclusion is still a minority story on the continent.

 

Map 1 Financial inclusion around the world 2017, source: Global Findex 2017 report

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But has mobile technology made any difference to financial inclusion? It is increasingly so. A map of ownership of mobile money accounts (those who own an account and use a mobile phone to access it) tells how things have improved (Map 2). Over the last three years, some economies in East Africa such as Uganda or Kenya have accumulated owners of mobile money accounts; West African economies are treading the same path. Although it remains the case that the majority of African economies are home to the majority of adults without a mobile money account (60% or more without one).

 

Map 2 Digital financial inclusion in Sub-Saharan Africa, source: Global Findex 2017 report

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To explore further I build a non-linear multilevel model of accounts for each type of financial inclusion: in one the model explains owning a bank account, in the other owning a mobile money account. The model is non-linear because ownership is an indicator, as well as multilevel because 154,472 adults reside in 144 countries. The models account for country income groups, average national incomes, population, age, gender, education, employment, and personal incomes (quintiles). The most interesting findings relate to the associations with age and gender. I show marginal predictions of age and gender for financial inclusion below.

 

Figure 2. Marginal predictions of financial inclusion (own a bank account), calculated from the Global Findex 2017 microdata

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Figure 2 shows the age gradient of financial inclusion that is consistent with the life cycle effects of incomes and wealth. With age comes accumulation of wealth from earnings that needs to be stored for investment and consumption. So for both genders higher age groups have higher odds of owning a bank account (compared to the youngest age group) in a step-wise manner. The youngest (hollow point ○) and the oldest (solid point ●) form bookends to the predictions; both for men (left) and for women (right). There is also a clear gender inequality, although by age 25 women (diamond ◊, right) already have higher odds than the youngest male group. Thus financial inclusion reflects the life cycle effects of earning and saving.

 

Figure 3. Marginal predictions of digital financial inclusion (own a mobile money account), calculated from the Global Findex 2017

 

 

But the marginal predictions for digital financial inclusion do not conform at all to the life cycle effect (figure 3). Digital financial inclusion does not move lock-step with age. In contrast with traditional financial inclusion, the two oldest age groups have lower odds of owning a mobile money account; instead the highest predicted marginals are attained by the mid-30s. The solid point (● oldest group) for instance is furthest below the hollow point (○ youngest group). Here the two oldest–youngest groups do not form bookends. The gender digital divide is also sharper. For similar levels of other characteristics, no female groups have higher odds of owning a mobile money account than the youngest male group.

The strong age reversion effect (inclusion does not move in lock-step with age but reverts after age 40) suggests a generation effect. This is also consistent with the fact that many of the low income economies are still young while many of the high income economies are already ageing.

The puzzle that digital financial inclusion parts ways with financial inclusion may be driven by the generation effect. But there is no reason to expect that the life cycle effect should disappear soon. Thus the need for financial accounts around the world is likely to grow as adults age, leading to some reconciliation in paths of financial inclusion.

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Measuring the Big Data Knowledge Divide Using Wikipedia

Big data is of increasing importance; yet – like all digital technologies – it is affected by a digital divide of multiple dimensions. We set out to understand one dimension: the big data ‘knowledge divide’; meaning the way in which different groups have different levels of knowledge about big data [1,2].

To do this, we analysed Wikipedia – as a global repository of knowledge – and asked: how does people’s knowledge of big data differ by language?

An exploratory analysis of Wikipedia to understand the knowledge divide looked at differences across ten languages in production and consumption of the specific Wikipedia article entitled ‘Big Data’ in each of the languages. The figure below shows initial results:

  • The Knowledge-Awareness Indicator (KAI) measures the total number of views of the ‘Big Data’ article divided by total number of views of all articles for each language (multiplied by 100,000 to produce an easier-to-grasp number). This relates specifically to the time period 1 February – 30 April 2018.
  • ‘Total Articles’ measures the overall number of articles on all topics that were available for each language at the end of April 2018, to give a sense of the volume of language-specific material available on Wikipedia.

‘Big Data’ article knowledge-awareness, top-ten languages*

ko=Korean; zh=Chinese; fr=French; pt=Portuguese; es=Spanish; de=German; it=Italian; ru=Russian; en=English; ja=Japanese.
Note: Data analysed for 46 languages, 1 February to 30 April 2018.
* Figure shows the top-ten languages with the most views of the ‘Big Data’ article in this period.
Source: Author using data from the Wikimedia Toolforge team [3]

 

Production. Considering that Wikipedia is built as a collaborative project, the production of content and its evolution can be used as a proxy for knowledge. A divide relating to the creation of content for the ‘Big Data’ article can be measured using two indicators. First, article size in bytes: longer articles would tend to represent the curation of more knowledge. Second, number of edits: seen as representing the pace at which knowledge is changing. Larger article size and higher number of edits may allow readers to have greater and more current knowledge about big data. On this basis, we see English far ahead of other languages: articles are significantly longer and significantly more edited.

Consumption. The KAI provides a measure of the level of relative interest in accessing the ‘Big Data’ article which will also relate to level of awareness of big data. Where English was the production outlier, Korean and to a lesser extent Chinese are the consumption outliers: there appears to be significantly more relative accessing of the article on ‘Big Data’ in those languages than in others. This suggests a greater interest in and awareness of big data among readers using those languages. Assuming that accessed articles are read and understood, the KAI might also be a proxy for the readers’ level of knowledge about big data.

We can draw two types of conclusion from this work.

First, and addressing the specific research question, we see important differences between language groups; reflecting an important knowledge divide around big data. On the production side, much more is being written and updated in English about big data than in other languages; potentially hampering non-English speakers from engaging with big data; at least in relative terms. This suggests value in encouraging not just more non-English Wikipedia writing on big data, but also non-English research (and/or translation of English research) given research feeds Wikipedia writing. This value may be especially notable in relation to East Asian languages given that, on the consumption side, we found much greater relative interest and awareness of big data among Wikipedia readers.

Second, and methodologically, we can see the value of using Wikipedia to analyse knowledge divide questions. It provides a reliable source of openly-accessible, large-scale data that can be used to generate indicators that are replicable and stable over time.

This research project will continue exploring the use of Wikipedia at the country level to measure and understand the digital divide in the production and consumption of knowledge, focusing specifically on materials in Spanish.

References

[1] Andrejevic, M. (2014). ‘Big Data, Big Questions |The Big Data Divide.’ International Journal of Communication, 8.

[2] Michael, M., & Lupton, D. (2015). ‘Toward a Manifesto for the “Public Understanding of Big Data”.’ Public Understanding of Science, 25(1), 104–116. doi: 10.1177/0963662515609005

[3] Wikimedia Toolforge (2018). Available at: https://tools.wmflabs.org/

From Digital Divide to Digital Provide: Spillover Benefits to ICT4D Non-Users

31 August 2011 5 comments

ICTs bring benefits to those who have them and not to those who don’t. They therefore increase inequality.  Right?  Well . . . let’s see.

First question: what do you mean by “those who don’t have ICTs”?

We need something a bit more nuanced than a simple, binary digital divide, and can use instead a digital divide stack of four categories (see figure below):

Non-Users: those who have no access to either ICTs or ICT-based information and services.

Indirect Users: those who do not get hands-on themselves, but gain access to digital information and services via those who are direct users.

Shared Users: those who do not own the technology, but who directly use ICT owned by someone else (a friend, workplace, ICT business, community, etc).

Owner-Users: those who own and use the technology

Of course we would need to make transverse slices through the figure; potentially, one slice for each different type of ICT, but particularly noting many in developing countries would be in a different category level for mobiles compared to the Internet.

 

Second question: what’s the evidence on inequality?

It is relatively limited and often bad at differentiating which digital divide categories it’s talking about.  However, we can find three types of evidence.

The Rich Get Richer; The Poor Get Poorer: situations in which some category of user gains a benefit from ICT while non-users suffer a disbenefit.  For example, micro-producers of cloth in Nigeria who owned or had use of a mobile phone found they were gaining orders and income; micro-producers without mobile phone access found they were losing orders and income (to those who had phones). (See also work on growing costs of network exclusion.)

Development vs. Stasis: situations in which some category of user gains a benefit from ICT while non-users do not gain that benefit. For example, farmers in rural Peru who used a local telecentre were able to introduce improved agricultural practices and new crops, which increased their incomes.  Those who did not use the telecentre just continued farming in the same way as previously.

Spillover Benefits: situations in which some category of user gains a benefit from ICT while non-users also gain a (lesser) benefit.  One rather less-publicised outcome from the case of Keralan fishermen using mobile phones to check market prices is an example.  Those fishermen without mobile phones saw their profit rise by an average Rs.97 (c.US$2) per day as a result of the general improvements in market efficiency and reduced wastage which phones introduced.  This was about half the profit increase seen by phone owners and meant, even allowing for the additional costs, that returns to phone ownership were greater than those for non-ownership.  However, it was a spillover benefit to non-ICT-users.

ICT4D research on spillovers to non-users specifically has been rare, with the main interests in non-users being to understand why they are non-users; and most spillover work being done between sectors or enterprises and/or focusing on the spillover of encouraging ICT adoption rather than more immediate benefits.

This does seem to be changing, perhaps because of the growth of mobile and related to earlier work on the externalities to non-users of arrival of rural telecommunications.  Rob Jensen’s Kerala study found a second digital spillover: while fishermen’s revenues rose, the price per kg fell due to the increase in supply arising from less waste.  Fish consumers (many likely non-users) now paid less than previously thanks to the mobile-induced efficiency gains.  More directly, a study of M-PESA’s community effects in Kenya found its use providing positive financial, employment, security and capital accumulation externalities that affected both users and non-users within the community.

We also have a little evidence of spillover benefits from owner-users to indirect users:

Follow-up work with Keralan fishermen found fish workers who will only get into a boat with a mobile phone-owner due to safety concerns, with these indirect users able to benefit from the owner should the boat get into difficulties.  That paper’s author (personal email) also gives the example of an indirect user citing as a benefit being informed of – and able to curtail – his daughter’s illicit elopement via his boat owner’s phone.

– Research on farmers in Northern Ghana[1] found those who did not themselves own or use mobiles benefitting from information passed on from phone owners, including more frequent meetings with agricultural extension officers; meetings that were coordinated by phone owners.

In all these cases, owner-users are benefitting more than the lower-category users to whom benefits spill over.  That means – if you’ll forgive the pun – that in these cases ICTs are causing all boats to rise but the ICT-using boats to rise somewhat faster.  Inequality may still grow; perhaps absolutely but not relatively.

I look forward to what appears to be forthcoming work by the Global Impact Study on non-user spillovers.  However, this remains a poorly-understood and little-researched issue; one that needs a greater focus since it is central to understanding the digital divide and digital inequalities.  It also has implications for practice; suggesting ICT4D projects should promote non-user spillovers as much as they promote ICT usage.  As ever, your pointers to spillover research and practice are welcome.


[1] Smith, M. (2010) A Technology of Poverty Reduction for Non-Commercial Farmers? Mobile Phones in Rural North Ghana, BA dissertation, unpublished, University of Oxford, UK

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