Administrative Payment Data, Information Aggregators and Financial Education: A new way for governments to promote prosocial behavior
This is a collaborative project with the city government of Santo Domingo to study how payment compliance for public garbage collection is improved when citizens learn about credit scores and understand their payment data may affect their ability to access financial markets. Governments in developing countries have limited ability to force citizens to pay for public goods such as taxes for garbage collection. In a modern economy data is collected and reported across markets and governments can invest in the ability to report undesirable behavior to information aggregators and credit scoring agencies as a way to punish citizens. Less financially literate citizens will potentially not understand the consequences and suffer from worse financial conditions. In a first stage, we will analyze administrative data on the payment histories of every property in Santo Domingo. Using this information we hope to help the government of Santo Domingo to be in a better position to report delinquent payments. We will undertake targeted interviews and focus groups to gain a deeper understanding of the determinants of payment compliance. In the second stage, we will design and implement a household survey to document the level of financial literacy of the population. We will then conduct a randomized control trial to evaluate the impact of explaining to households the consequences of not paying and the potential effects on their credit score. This will shed light on how to address free-riding and how to improve a state’s capacity to effectively collect payments for government services. This project is funded by J-PAL’s Government Initiative.
- Coauthors: José Pellerano
- Date: 2017