Yale University economic's professor Dean Karlan has recently been conducting innovative research that is determining if special savings plans can help alleviate deep-rooted poverty. His idea is termed "microsaving," which plays off of the strategies of microcredit and microfinance. Instead of focusing on loans, microsaving emphasizes that savings can lead towards investments in education and other important assets that will improve the financial situations of poverty-stricken people. Karlan argues that even very small amounts of savings can be beneficial in many different ways, such as helping to send a child to school or allowing a family to purchase high-yield seed varities. The Yale professor's research will be funded by a $7.3 million grant provided by the Bill and Melinda Gates Foundation, with the goal of determining the affects of various savings accounts on people's lives who suffer from severe poverty. Karlan, along with Alex Kobishyn of the Innovations for Poverty Action group, stress that research "has shown that the poor can save and often go to great lengths to save." They firmly believe that these microsaving strategies are needed, and that they can have positive affects on the fight to reduce poverty. And the best part is Karlan will keep the public well informed on his research findings at each step of the way, so people will know immediately if microsavings is truly beneficial.
- Brock McNairy
SOURCE: New Haven Register