Published on Development Impact

Pooling risk, saving for health, looking inside the body: what mobile phones may soon allow us to do everywhere

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On my return from a long work trip in Thailand and the Philippines, I stopped at the University of Southern California to attend the 4th global health supply chain summit. I typically enjoy attending meetings outside my immediate discipline since I get to hear about new ideas in fields far from my own. This conference was no exception. What caught my eye were the many talks concerned with new applications of mobile technologies and how they may eventually be used to improve population health and welfare.

Two facts are driving product innovation in this area: 1. Apparently 90% of the world’s population now lives within range of a cell phone tower, and 2. smart phones are now more powerful than the personal computers from even a few years ago. We are all familiar with certain consumer applications enabled by smart phones (such as advanced banking services). One firm, Mobisante, has developed an ultrasound imaging system based on a smartphone platform. With this device, ultrasound can be easily provided in remote areas as well as in emergency settings and disaster response situations. Data can also be transmitted for review by specialists far from the patient.

While still a fraction the cost of more conventional diagnostics, the current price of this platform puts it out of reach for very wide spread use in developing country health systems (or widespread data collection) but prices should fall over time. Other mobile applications being tested include the ability to turn a smart phone into a microscope, an electrocardiogram tester, and a lab for blood diagnostics. I’m excited not only by the potential for more effective mobile health care, but also by the measurement possibilities for future population based studies.

On the transactions side, cell phones are revolutionizing not only the way information travels but also the means through which resources are transferred from one party to the next. Many are familiar with the widespread adoption of M-Pesa in Kenya. Now firms are forming to take advantage of the M-Pesa platform to offer financial services to low-income populations. One example is Changmka Micro-Health, which has developed a mobile technology and smart card system that serves as a health pre-payment mechanism. Users can transfer savings to their health card at any frequency and at any amount no matter how small. This platform, for example, offers a mechanism for committed savings for a full maternal health program for pregnant women. These savings go to non-expired accounts with the goal to help pregnant women raise the estimated $35 of out-of-pocket payments necessary for complete maternal health services. This of course may be particularly beneficial if other forms of savings (i.e. cash under the mattress) can be expropriated by others in the household.  As it operates through a mobile phone, savings prompts and health messages can also be delivered to each client.

Since this is the DI blog I would be remiss to not at least mention some recent research on the welfare benefits of new mobile technologies. Two papers this year explore the informal risk sharing possibilities afforded by the ability to send money through cell phones. And it appears there are significant gains by being able to rapidly send money over long distances at low cost. Furthermore, the mobile technology allows the maintenance of risk-sharing networks over larger areas. This is important since traditional networks, that are more geographically concentrated, have less of an ability to share risk when an area-wide shock affects a large part of the network.

Joshua Blumenstock, Nathan Eagle, and Marcel Fafchamps look at a specific form of money – mobile airtime – that is transferable across the Rwandan cell phone network and how transfers of this currency responded to a 2008 earthquake in the eastern part of the country. Rather fantastically, the researchers have access to the transaction records of all mobile phone activity in the country from 2005 to 2009. While comprehensive, this anonymous data does not contain characteristics of the caller and receiver so the researchers combine these call records with specially collected survey data on phone usage and household characteristics to impute socio-economic measures for each subscriber in the data.

The authors find that immediately after the earthquake there was a large transfer of airtime minutes to people close to the epicenter. Further, they attempt to distinguish the motivations for these transfers from between either charitable altruistic motives or reciprocal risk sharing. They do this by modeling both motivations and their consequent behaviors and then looking at transfer patterns and characteristics of the sender and the recipient. The giving after the earthquake is most consistent with a model of reciprocity rather than pure altruism.

Another point highlighted by the authors – current phone owners are significantly wealthier and also more likely to receive a transfer after the earthquake. The equity implications of the mobile revolution till date are clear even if the future holds out promise of greater inclusion.

There is also a work-in-progress by William Jack and Tavneet Suri that looks at the ability of M-Pesa users in Kenya to smooth consumption in the advent of an income shock and find that, while M-Pesa users do not reduce consumption when faced with a negative shock, non-M-Pesa users reduce consumption by 7 to 10 percent. The authors argue that this gain is due to the reduced transactions costs of money transfer with the mobile technology, enabling the maintenance of risk pooling networks over a broader area and a larger number of members. This is a rich paper (as is the one mentioned above) but apparently not yet a formal working paper, so I expect the DI blog will return to discuss further in more detail at a later point.



Jed Friedman

Lead Economist, Development Research Group, World Bank

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