FAIR MONEY

Face to Face with Inequality

Category Archives: research


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Program Description: Survival Skills

Do you support FAIR Money’s mission? Would you like to be a part of it? Then drop us a line at fairnetwork at gmail.com. Or perhaps you would like to contribute financially? Send your donation via PayPal or Square Cash to fairnetwork at gmail.com.

Project “Survival Skills” Mission

  • Create insight and empathy into the financial realities of Americans struggling with low wages, shrinking income and rising expenses, and the fallout from the 2008 financial crisis.
  • Facilitate conversation about money and money management options and so break through isolation.
  • Inform the work of organizations that provide aid or develop tools meant to alleviate struggle.

Project Description

In FAIR Money’s earlier research, it became apparent that people who struggle financially, for whatever reason, have important financial skills that are not typically recognized by standard financial literacy education and that are in fact more relevant to real-life situations that are common under our current conditions of high inequality. Project [name] is an extension of that earlier research.  It seeks to build a knowledge base of financial skills and knowledge that:

  • Is cognizant of and suited to the financial realities people face when they find themselves trapped by low wages, wage stagnation, and a variety of external forces they cannot control.
  • Contributed and tested by the people who are living those realities.
  • Takes into account the local context of Silicon Valley, with its exceptionally high cost of living and high proportions of relatively recent immigrants.

In three distinct phases, Project [name] will gather skills and knowledge that are relevant to different contexts:

  1. Skills, tactics, tools, connections, and knowledge that help a person weather a financial crisis
  2. Conceptual models and financial tools that facilitate long-term financial stability
  3. Parenting approaches that contribute to resilience and sound financial decision-making in young adults

Data will be gathered through a variety of interactions with participants, including interviews, participatory design workshops, and online diaries.

Although the research will be conscious of local conditions, we expect that many of the financial skills, concepts, and approaches will be more widely applicable and can form a foundation as the model is replicated in other locations.

Phase I: Crisis Skills

This phase will consist of a round of individual interviews with people who find themselves in a financial crisis or have recent experience with financial crisis to gather initial data. It will be followed by several series of group discussions to identify, trial, and evaluate crisis-management skills put forward within each group. Group findings will be published by FAIR Money and will be made available, in the form of workshops, to other organizations that offer aid or create financial management tools for low- and moderate-income Americans.

The anticipated outcomes of the project are as follows:

  1. Identification of financial information and concepts that are most helpful in dealing with a financial crisis [other than the fake solutions offered commercially], with insights into how the information makes a positive difference.
  2. Identification and definition of skills that are important in order to regain more stable financial footing, illustrated with testimonials and step-by-step instructions.
  3. Identification of the most useful financial management tools (whether high-tech or low-tech), affordable financial services, and organizations that offer assistance.
  4. [Identify how findings apply to other contexts/locations.]

Phase I Timeline

Data gathering for Phase I is anticipated to take approximately 4 months, followed by an analysis, collation, and publication phase of approximately 2 months. The project start date is contingent on fundraising success, but is assumed to be September 2015.

  • Initial Interviews: October/November 2015
  • Group Meetings: December 2015/January/February 2016
  • Analysis and Publication: Summer 2016

Do you support FAIR Money’s mission? Would you like to be a part of it? Then drop us a line at fairnetwork at gmail.com. Or perhaps you would like to contribute financially? Send your donation via PayPal or Square Cash to fairnetwork at gmail.com.

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FAIR Money Meetup on Inequality

FAIR Money is kicking off a monthly Meetup on Saturday March 21 in San Francisco. We’re hoping to meet other people who are interested in inequality and who are itching to do something constructive about it. Interested in joining us? Check out the Meetup page.

We’re planning to make it a movable feast and pick different locations around the Bay Area, so if you can’t make it this time, perhaps another month will work for you.

We hope to see you there!


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Good with Money

Good with Money CoverFAIR Money has just published its first report, Good with Money: Getting by in Silicon Valley. The report, which is based on interviews and a diary study with 10 people struggling to gain or hang on to firm financial footing in a booming local economy, focuses on the most striking finding: how skilled people are with money and how little their skill set overlaps with the money management skills traditionally taught in financial literacy classes.

The report’s introduction sums up the central arguments:

The “master narrative” of financial probity that dominates American culture at this historical moment makes it almost impossible to see the financial behavior of low- and middle-income Americans without a strong punitive bias. This dominant narrative focuses on living well within one’s means, using credit cards responsibly, saving for financial milestones, and managing one’s credit score. It refuses to acknowledge that wage stagnation, underemployment, and rising costs of health care and education leave vast numbers of Americans with insufficient income to cover basic expenses. When we consider financial actions and decisions from the inside out, in their full complexity and in the context of meaningful relationships and life choices, it becomes readily apparent that struggle, hard work, ingenuity, and bad luck are much more common than financial irresponsibility or ignorance.

One of the practical manifestations of this master narrative of (assumed lack of) financial probity is the financial literacy industry, both for-profit and not-for-profit. Financial literacy education makes a foundational assumption that adverse financial outcomes are due to ignorance and/or irresponsibility and that education can effectively eradicate both. This report argues that offering education as a solution to financial struggle is a fairy tale that does real harm. It obscures the massive 30-year-long redistribution of wealth to the very top of American society. It blames the victims of this redistribution for their misfortune and distorts our thinking and our judgment. In obscuring the causes of the financial struggles experienced by average Americans, financial literacy education also makes it much more difficult to think about true solutions.

Good with Money discusses particular “scripts” in the master narrative condemning people who struggle financially, and it proposes a different way to think about their choices and decisions. The report also contains the financial stories of the research participants told through a lens of empathy and historical understanding.

We look forward to your comments.

The FAIR Money Research Collective


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Reflection as a Luxury Good

Maria Konnikova has an excellent article in the New York Times today, entitled “No Money, No Time: The Poor Are Under a Deadline that Never Lifts.” She sums up the experimental work of Sendhil Mullainathan and Eldar Shafir on the effects of poverty and works her way backwards to reality, applying their conclusions to the lives of the people at the bottom of the heap. In the lab, people in artificially induced states of poverty perform worse than people operating under conditions of abundance. Mullainathan and Shafir also conclude that they tend to solve for the present moment more–meaning they borrow, handicapping their future performance.

Mullainathan and Shafir decompose poverty into three components: lack of money, lack of time, and lack of bandwidth (by which the mean the ability do dedicate sufficient mental resources to any given problem so as to make good decisions). Their argument is that a lack of money correlates with a lack of time in the real world, and that both conspire to reduce available bandwidth for decision-making.

Shafir recommends designing programs to reduce bandwidth demands and uses the FAFSA as an example:

“If I give people a very complicated form, it’s a big demand on cognitive capacity,” Mr. Shafir says. “Take something like the Fafsa” — the Free Application for Federal Student Aid — “Why is pickup for the low-income families less than 30 percent? People are already overwhelmed, and you go and give them an incredibly complicated form.”

To him, the obvious conclusion is to radically change our thinking. “Just like you wouldn’t charge them $1,000 to fill out a form, you shouldn’t charge them $1,000 in cognitive complexity,” he says. One study found that if you offer help with filling out the Fafsa form, pickup goes up significantly.

Interestingly, their work also seems to support one of the tentative findings from FAIR Money’s Payday loan study, that talking about one’s situation, even if only to a researcher who offered no comment, seemed to have an effect on decisions about how to handle one’s financial dilemmas. By paying people to participate in our study and talk about their situation, we paid them to take time to reflect, alleviating some of the pressure on two of those three dimensions of poverty.


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Calling for Humanism

Peter Buffett has a spot-on op-ed in the New York Times today, in which he calls out the complicity of philanthropy in a culture of exploitation and inequality, by which the right hand gives a little philanthropy as a sop to problems the profit-mongering left hand has created.

Especially relevant to the mission of FAIR Money is his indictment of philanthropic financial services to the poor:

“Microlending and financial literacy (now I’m going to upset people who are wonderful folks and a few dear friends) — what is this really about? People will certainly learn how to integrate into our system of debt and repayment with interest. People will rise above making $2 a day to enter our world of goods and services so they can buy more. But doesn’t all this just feed the beast?”

Buffett says he is not calling for an end to capitalism, he is calling for humanism.

FAIR Money has started talking about what it takes to empower people (of all levels of income) to participate financially on their own terms. In Buffet’s words: what does it take to stop feeding the beast? I hope we can arrive at an answer using a thoughtful, inclusive, participatory process.


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The Moral Hazards of Too Much Money

If you think the pursuit of happiness is essentially a private affair, then recent research findings regarding the impact of inequality will make a hash of your most cherished beliefs. A Greater Good article summarizing the research on inequality points out that people are happiest and most compassionate in countries with the least inequality. And it’s not the poor who are short on compassion, but the wealthy. People who are significantly wealthier than others, it turns out, are not only less generous but also more apt to drive over hapless pedestrians who find themselves in a crosswalk when the wealthy come barreling down the street. People who are given an obvious advantage in games of monopoly still think they are brilliant and deserving when they win. Food for thought. 


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Anatomy of Predatory Credit

Predatory lending in a nutshell

Predatory lending in a nutshell

The Pew Research Center’s payday loan infographic is helpful, but it doesn’t quite show what sort of a trap you fall into when you borrow the same $375 loan over and over again without ever paying off principal. Their latest study on the payday loan industry reports that only 14% of typical payday loan borrowers have room enough in their budget to pay off the loan in full. Another interesting finding from the same report is that 27% of payday borrowers also end up with overdraft fees from the bank when the payday lender withdraws the full amount of the loan. That would mean you pay $85 or more for the privilege of disposing of $375 for the duration of two weeks.


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FAIR Money’s First Project is Underway

The FAIR Money research collective has kicked off its first research project, visiting 8 participants at home and starting them off with on the diary portion of the study. The interviews were incredibly informative.

If you’d like to be considered for participation in this study, please fill out our questionnaire: http://bit.ly/fair-research

If you fit the criteria for our study, we will be in touch!