For some poor people the implicit rate of return on saving is sharply negative — Cowen estimates around minus 75% in central Mexico and an Indian study finds around minus 30% — because holding cash triggers obligations: relatives borrow and don't repay, village festivals demand contributions, or a husband spends it, so one must save nearly four times the target to net it.

factualpending

Speaker

Michael Munger

Evidence Quote

Tyler Cowen actually comes up with an estimate for some people in central Mexico about what's the implicit rate of return on savings and he gets negative seventy five percent

Source

Mike Munger on Microfinance, Savings, and Poverty 04/18/2011EconTalk
Created: 6/17/2026, 10:29:24 AM

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