Data Scientist
7 karmaJoined Jun 2020Working (0-5 years)Oxford, UK


Answer by ShivMAug 26, 202080

I'll try and answer the question regarding why banks don't lend for people to get themselves dewormed, though these factors will translate to the question at large I think. Most of what I write is drawn from Poor Economics, by Banerjee & Duflo.

One factor has to do with the systems for lending in third world countries. As Larks writes fixed costs associated with loans are often too high to justify smaller loans, and as you say, lenders often don't carry the power to be able to enforce and collect these loans (so higher loan amounts can still be unattractive to these institutions). This is why private money lenders from within the community, or borrowing from friends/family is much more common in these areas, compared to banks or other formal institutions. There is a role for microfinance institutions to play here, as far as I'm aware RCTs have shown some modest economic benefit to recipients, but nothing huge.

Even if credit were available, people may not take these interventions due to a variety of factors. Many people do not know the effects of deworming on health or education, and the effect of those in turn on future economic prospects. Human biases to discount future goods/rewards would also play a role. Deworming is just one such intervention people in third world countries would need to consider, among other responsibilities are buying chlorine to clean their own drinking water, buying a bednet, vaccinating their children, etc. in addition to leading their regular lives. In first world countries, we enjoy having many of these interventions "built-in", clean water from the tap or vaccinations in schools for example, so it's not surprising individuals in third world countries don't act on any specific intervention on their own accord.

The reason lending for these interventions, at least for the "low hanging fruit", such as deworming, doesn't exist would have to do with the fact the institutions and systems aren't set up to accommodate this, and even if they were people may not necessarily take them up. I suspect making interventions easier to access (probably free) will go further than having credit more easily available. This feels similar to the reason insecticide-treated bednets are given out for free, rather than selling them (even at a highly subsidised rate). Because of this, I'm inclined to think more "top-down" approaches, such as universal free deworming in schools, would work better than having a lending institution.