During the Liberation Technology Seminar on March 1, Joshua Blumenstock, a Ph.D. candidate at U.C. Berkeley’s School of Information, demonstrated the use of “big data” to explore the economic impact of mobile phone technologies in sub-Saharan Africa. Blumenstock focused on a project in Rwanda, which leverages an enormous database of phone calls, text messages, and mobile money transfers. Using this data, he studies the patterns of remittances through mobile phones and explores if this new mechanism can serve as an effective social insurance during economic shocks. He hopes that this new data will provide insight into socioeconomic behavior, and improve policy and welfare in developing economies.
He argued that mobile money has quickly gained prominence in areas with very little formal banking, and it is used to send phone credit, make purchases and withdraw cash. On average, 200 million dollars are sent a day in Kenya alone through this mechanism, indicating the huge potential for such transfers in developing economies.
His data indicates that money is sent in response to shocks, supporting the hypothesis that phone-based technologies can enable risk-sharing. Blumenstock uses in situ evidence to explore the motives for this pro-social behavior. He used phone data from 1.4 million individuals over a period of 4 years to investigate how much money is sent, why it is sent and who benefits. He found that mobile money transfers have a highly reciprocal component and that most transfers go to the elite. In light of this evidence, Blumenstock concluded that while phones have had a positive impact on the lives of some people in times of crisis, the benefits of mobile technologies may not be reaching those with the greatest need.