geographical differences in how individuals and families ... · in lower/lower-middle income...

Geographical Differences in How Individuals and Families Save for Education:

A Global Analysis

Moses Okumu, MSW University of Toronto

David Ansong, PhD, MSWUniversity of North Carolina at Chapel Hill

Frank Otchere University of North Carolina at Chapel Hill

2018 Esri Southeast User Conference

May 3, 2018

2

Primary (1st-6th Grade)

Junior High (7th–9th Grade)

Senior High (10th–12th Grade)

Tertiary

Returns on Education

Greater returns

on education

investment at

higher education

levels

Education plays a transformative role in fostering the social, cultural, and economic well-being of individuals and societies.

Models of Education Financing

3

Education funding models

Tuition free (subsidies)

Scholarships

Student loan

Education savings

accounts

Increasingly, families are expected to bear some of the

cost of schooling, especially at the post-secondary level.

Why and How People Save? Theoretical Explanations

Financial socialization

People learn the importance of and how to save from their parents and other socialization agents

Behavioral economics

“Choice architecture” shapes financial decisions

Neoclassical economics

Poor people save for precautionary

purposes

Institutional structures

Access, Information, Incentives, Facilitation,

Expectations, Restrictions, & Security

Study Aims

5

1. To understand how earnings and access to formal savings accounts facilitate the odds of saving for education.

2. To examine if there are underlying distinct spatial profiles of how people save for education.

Data Sources

6

2014 Global Findex Database

• 150,000 people in 143 countries

• In each country, a nationally representative sample of approximately 1,000 people

• Age 15+ years

World Bank’s World Development Indicators

• Country-level data

Measures

Outcome • Saves for education (Yes/No)

Predictors of interests

• Account ownership

• Income (Wages, government assistance, & agricultural income)

Individual-level

covariates

• Age

• Gender

Country-level

covariates

• Government expenditure per student

• Income status

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• Income quintiles

• Education level

Data Analysis: Grouping Analysis

• Hypothesis:

– a 4-group profile based on the income status (high, upper-middle, lower-middle, lower income).

• ArcGIS Grouping Analysis tool:

– Calinski-Harabasz pseudo-F-statistic (Within-group similarity: Between-group difference)

– No contiguity or proximity restrictions.

8

5 measures who saves for

education/ school fees

Overall population

Females

Males

Adults

Youth

Rural residents

Aim: Understand underlying distinct spatial profiles in saving habits.

Data Analysis: Multilevel Modeling• Used ArcGIS graphical tools to assess country-level variability and need

for multilevel modeling.

• Intraclass correlation coefficients (ICCs) : .10 - .11

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World

Freq.(%)

Sub-

Saharan

Africa

%

OECD

%

Latin

America &

Caribbean

%

East Asia

& Pacific

%

South

Asia

%

Saved for education***

Yes 13,033(50) 56 39 52 60 40

Female*** 13,708(53) 47 62 58 59 48

Education***

≤ primary 8,519(33) 41 9 26 44 47

Secondary 13,695(53) 51 66 58 44 45

Tertiary 3,698(14) 8 27 16 12 8

Has an account*** 15,202(58) 53 90 55 63 57

Receives

Wages*** 9,324(36) 31 66 37 35 22

Gov't support*** 3,281(13) 9 28 14 19 6

Farm income*** 7,094(27) 41 4 11 34 31

Descriptive Characteristics

Grouping Results: 3 Distinct Groups

Parallel boxplot showing 3 groups of savers

Pseudo F-statistic plot showing optimal groupings

Grouping Results: 3 Distinct Groups

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±Saving for education

Lowest

Highest

Average

Results of a spatial grouping analysis showing classification of countries into 3 distinct groups.

Multilevel Modeling Results

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Fixed Effects

Global

OR(SE)

sub-Saharan

Africa

OR(SE)

OECD

OR(SE)

Has savings account 1.60 (0.15) *** 1.76 (0.21)*** 4.93 (2.09)***

Receives wages 1.10 (0.07) 1.45 (0.13)*** 0.94 (0.31)

Gov't assistance 0.90 (0.06) 0.97 (0.19) 0.77 (0.09)*

Agricultural income 1.44 (0.14) *** 1.32 (0.16)* 1.82 (1.18)

*p < .05, **p <.01, ***p < .001; OR: Odds ratio; SE: Standard error;

Discussion

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Having a savings account

helps

Ownership of a savings account may be more instrumental in fostering the habit of saving for education expenses than being a salary or wage earner.

The saving mechanisms

matters

In lower/lower-middle income countries, saving with a bank may not necessarily be the preferred way to set aside money for educational expenses.

Where you live matters

Compared to high income countries, families in low-income countries are more likely to use the education savings model to prepare financially

for education expenses.

Questions & Discussions

David AnsongUniversity of North Carolina at Chapel Hill

School of Social Workansong@email.unc.edu

Thank you!

15Under-resourced School in Ghana