The Economics of Poverty in Kenya

Swarthmore Economics Professor Syon Bhanot studies decision-making in the real world, focusing primarily on low-income areas.

Much of his work involves conducting large-scale randomized experiments with the ultimate aim of shaping policy discussions around poverty and well-being. In addition to research in the U.S., Bhanot works with the Busara Center for Behavioral Economics, an organization based in Nairobi, Kenya.

Two years ago, Bhanot and two colleagues conducted a randomized experiment through Busara with 432 Kenyans living below the poverty line in Nairobi’s teeming Kawangware settlement. Part of this work involved testing two elements of social-welfare program design. 

“Participants were randomly assigned to a ‘Work’ condition, involving daily work for unrestricted vouchers, or one of two ‘Wait’ conditions, involving daily waiting for vouchers that were either unrestricted or partially restricted to staple foods,” says Bhanot. They were testing whether working for welfare matters, and also how restrictions on wefare vouchers influence what people buy. Overall, they were looking into how social welfare program design might affect the consumption and wellbeing of people who benefit from such programs.

“Our main finding was that working significantly improved psychological well-being relative to waiting, suggesting that how we design welfare programs matters,” says Bhanot. “We also found that getting restricted vouchers made people increase their spending on staple foods by more than we might rationally expect them to. This suggests that programs that use voucher restrictions, like food stamps, may actually encourage greater consumption of food items than giving people money to spend on whatever they want.”

In summer 2016, the Lang Center at Swarthmore teamed up with Bhanot and the Busara Center to offer two summer internships in Nairobi. Katherine Kwok ’18 and Meghan Kelly ’18 were selected and traveled to Kenya, where they worked on research and policy projects for professors and development practitioners from all over the world. They also worked on their own independent research projects. 

Kelly’s included asking Kenyan students questions about their aspirations for adulthood. 

“I hope that posing this question instilled a sense of hope in the students that they could achieve their goals,” says Kelly. “I learned so much more from them than they learned from me, though.”

Kelly and Kwok also helped Bhanot develop the protocol for an experiment that focused on how low-income Kenyans make cooperative, or “prosocial,” decisions. That is, why do people do things at a personal cost, when there are only scattered collective benefits? Much of the existing work on these questions comes from research with undergraduate populations, but the real world is often very different, and there is not much evidence on questions of cooperation in the developing world. 

“I found this incredibly fascinating because it was critical to consider how language barriers and social and cultural norms impact the ways in which the study must be conducted to lead to rigorous data collection,” says Kwok. “We had to redesign parts of the experiment ito accommodate for cultural, social, and other contextual differences.” 

The research work at Busara sometimes involves lab studies, bringing subjects from urban slums into lab environments to learn more about their decision processes. But it often involves fieldwork as well: going out into communities to study how low-income Kenyan populations make decisions in their everyday lives.

By working at the cross-section of research and policy, Kwok says, her experience at Busara deepened her interests. 

“It showed me that I am capable of pursuing this kind of career,” she says. “I have gained experience in designing and implementing research, as well as a better understanding of Kenyan politics and culture.” 

The experience at Busara was life-changing, Kelly agrees, and it sparked her interest in international development. 

“It challenged me to adapt to new environments and it pushed me to engage with my identity as an American college student working in a developing country,” she says.

This summer, two new Swarthmore students will continue in Kwok and Kelly’s footsteps as Busara interns.

“I hope this turns into an enduring partnership between Busara and Swarthmore,” says Bhanot. “Students gain a great deal from the internship experience, and interest is very high—the applicant pool nearly tripled this year. I am thrilled to see such passion from the students about research and tackling real social problems all over the world.”