What makes us happy? Love? Money? Or simpler pleasures like good health? At a November presentation hosted by the nonprofit group Women’s World Banking, a partner for Visa’s Financial Inclusion work in Nigeria, financial sector experts and bankers were asked these questions.
The address spawned from researchers’ findings that globally, men and women tend to evaluate their happiness the same; and that while money might not always greatly improve how you live your life, it improves how you view it. Additionally, access to financial services and savings creates a stronger wellbeing. “Even when we look at country trends, after controlling for age, education and marital status, we collectively see clear links between employment status, access to saving and happiness,” Gallup World Poll regional research director Neli Esipova says.
Breaking it down
The ongoing research – informally titled, “Financial Inclusion, Employment and Well-Being” – drew from 1.5m interviews of people in 150 countries starting in 2006. Gallup used two measures of wellbeing - objective indicators like employment, health and income; and subjective measurements. Gallup defined positive with these questions: do you laugh and smile? Do you feel well rested? Do you feel respected? Did you do something pleasant yesterday? Negative experiences were measured by asking: Do you feel sadness, anger, worry, pain and stress? Researchers also asked respondents to evaluate their life five years from now and if they encountered daily negative experiences – or positive ones.
“All three subjective measures give an additional angle to traditional economic indicators to help us really understand what makes people happy,” Esipova says.
Surprising results emerged:
- Men and women evaluate their lives the same, except for the Middle East and North Africa, where women evaluate their lives slightly higher than men.
- Denmark, which Esipova describes as a “high development group with a long life expectancy and high income”, has the most thriving people.
- Richest countries are not always at the top; and poorest countries are not always at the bottom. For example, Guatemala, one of the world’s poorest nations, sits at third place on the Positive Experience Index.
- Women experience more negative emotions than men, with women in former Soviet Union countries reporting the most negative experiences. Esipova sees health, unemployment, corruption and safety as potential drivers: “In every country, women feel less safe and more vulnerable than men, which is why formal financial services are so important for women.”
The data also examined how working affects happiness and found:
- In somewhat developed and highly developed countries, full-time employment improves happiness.
- In developing economies, most people earn little pay, so working full time doesn’t make you much happier. “Even if you work full time, you still lack access to clean water and good education for your children but [still] have exposure to crime and poor infrastructure,” Esipova says.
- About 53% of adult women around the world work versus 75% of men. Also, 17% of women work part time and don’t want to work full time.
Savings as a channel for happiness
Besides employment, saving money makes us significantly happier. “Having a safe place to save gives you assurance against unforeseen risks; and seeing yourself reach a savings goal might make you very happy,” says Leora Klapper, lead economist in the development research group at the World Bank. She adds that having a bank account increases the security, privacy and control over money, especially for women. “Growing rigorous data shows giving women an account increases her empowerment over household decisions and how the money is spent. Interesting research out of Kenya also shows that happiness also comes from increasing a family’s spending on nutritious food” (pdf).
While the connection between savings and happiness is encouraging, challenges remain when women remain less likely to have an account than men, Klapper says. “In countries like India, men are more than 20 percentage points more likely than women to have an account.”
Efforts from nonprofits and the banking sector
Mary Ellen Iskenderian, president and CEO of Women’s World Banking, notes that recent efforts from public, private and nonprofit sectors to increase financial inclusion have clearly paid off, largely because of partnerships reaching the unbanked through innovative, user-friendly financial services.
“Women are avid savers and better repayers who invest their money in their children’s education, healthcare for their families and better housing; all things that can make positive inter-generational change for herself, her community and the economy,” says Iskenderian. “Banks who are not serving low-income women are missing a significant and profitable market segment.”
Examples include:
Visa and the organization Enhancing Financial Innovation & Access (EFInA) supported Women’s World Banking’s partnership with Diamond Bank, a large commercial bank in Nigeria. The resulting BETA Savings program allows clients, many of them low-income women working in city markets, to make small deposits through mobile technology without a minimum balance and no fees.
Women’s World Banking also partnered with NBS Bank in Malawi to develop the Pafupi – translated from Chichewa as “close” – which is a digital savings account designed for low-income rural women with no previous access to a bank. Women can open accounts and make small deposits and withdrawals at local shops with NBS Bank agents using mobile technology.
Given that employment and account ownership relates to greater wellbeing for men and women, Klapper and Esipova offer the following additional to-do list for the banking sector:
- Note that an appetite for long- and short-term savings and insurance products exists.
- See unbanked adults who receive regular wage payments as a big audience. Having wage payments deposited into an account helps women in particular build a credit history to help them become eligible for loans and other financial services.
- Help increase digital wage payments. Over 400 million unbanked adults, of whom 120 million are women, still receive cash payments.