Financial Accessibility In A Globalized World - An Interview With the World Bank's Margaret Miller
BY, MONIKA SAMTANI, CO-FOUNDER, AND EMILY MONTAGUE, MANAGING EDITOR, THE FEM WORD
As the Lead Financial Sector Economist, Margaret Miller says that, “advice from financial institutions may not direct people to the most advantageous or lowest cost options…[and] finding ways to reduce the mental burden of dealing with finances, as through automatic deductions for savings or bill payments, are important to improving financial outcomes.”
Margaret Miller is an award-winning economist and financial activist who uses her leading role at the World Bank to educate, empower, and support countless women, men, and children in their journey toward financial literacy. The Fem Word’s Monika Samtani and Emily Montague had the honor of sitting down with Margaret to discuss the changing world of finance and what it means for those who need better access to the resources that allow them to thrive.
Margaret Miller, Lead Financial Sector Economist, World Bank
PHOTO: Monika Samtani
Q: Let’s start, as always, with a look at your life from a personal angle. Where did you grow up, and what was your childhood like? Tell us about your early experiences with money and education.
Margaret Miller: I grew up in Ohio. My father died unexpectedly when I was five years old and this created a financial crisis for our family, as he was the sole breadwinner at that time. We had to move out of our home to a small rental property, shopped at the local grocery on Saturday afternoons (before they would close for the weekend) so we could buy discounted produce, and had no extra money for several years – no movies, eating out (except for the occasional and highly anticipated McDonalds or Kentucky Fried Chicken) or vacations. There was a winter where the heating wasn’t working properly in our rental and we couldn’t afford to repair it, so we wore our coats indoors. I remember it being for the season – it was probably for only a few days or weeks and even that left an impression. But we never lacked for anything important. There was always food on the table and a roof over our heads, and most importantly lots of love. There was also a consistent focus on learning, education and doing one’s best. Lack of money wasn’t an excuse but a motivator. Fortunately, my mother, Marjorie Miller, was both educated – she had a Master’s degree in Home Economics with a minor in child development – and very resourceful and resilient, so we managed to eventually get back to a more stable financial situation. She became a university professor at Bowling Green State University. Her job made me aware of the importance of education, both from her example of being such a strong and capable independent woman, and by being exposed to the academic environment and for the opportunities it provided for her to respond to my father’s death, provide for our family, and have a fulfilling career.
Q: I’m sure there were plenty of moments that led you to where you are today, but which events stand out to you the most as far as your journey into the world of finance and global banking?
Margaret: I was interested in finance from my time as an undergraduate student majoring in economics. My interest in finance was strengthened from working as a research assistant for Professor William Sharpe at the Stanford Graduate School of Business. Professor Sharpe contributed to the development of the Capital Asset Pricing Model, which clarified the relationship between risk and return for assets. He was awarded the 1990 Nobel Prize in Economics for this research. Working for him, I became interested in doing research in finance and [became] aware of the importance of attention to detail and data quality to produce solid results. I also became more acutely aware of the vast difference between financial knowledge and opportunities afforded to wealthier and more educated consumers and those at the bottom of the pyramid.
Q: You’ve been praised for your creative use of media and entertainment channels to promote financial literacy, access, and education all over the world. Most people don’t think about fun or art when they think about banking, but your work is a good example of how things are starting to be reframed.
When it comes to television, radio, visual arts, video games––all of these expressive mediums we tend to take for granted––what about them inspires your work? How do you visualize the connection between, let’s say, a person’s experience with a tv show and their need for better financial perspectives?
Margaret: I grew up loving watching television. I watched shows that all the other kids were tuning in to such as The Brady Bunch and The Partridge Family. I also loved seeing examples of other single parent households such as The Courtship of Eddie’s Father (where Jodie Foster got her start) and Julia, where Diahann Carroll broke barriers for her depiction of an African-American widow raising her son working as a nurse. I also watched programs that were on late at night – including Johnny Carson, who my mom said, only half-jokingly, kept her sane when things were really difficult in the first few years after my dad’s death. All in the Family was another show that we never missed. The direct way it took on difficult issues in society – from racial and religious prejudice to the role of women and social class – was fascinating. And that it could be done with humor and sensitivity to the show’s complex characters made it really resonate with me. My first savings goal was to save for my own television, so that I could watch television at night in my room. I saved every penny I received as a gift, or from lemonade stands, for more than two years and eventually purchased my own television when I was 7 or 8. The role that television played in my childhood, both in terms of validating my experience of having a working mom and single-parent household and opening my eyes to the wider world, made it easier for me to see the potential for entertainment education in my work on financial literacy years later.
Margaret and late her mother, Marjorie Miller, at French Lick Resort, Indiana
My work on financial inclusion – creating opportunities for people to use formal financial services ranging from savings and credit to insurance and modern payments – led to an interest in financial literacy. More successful formal financial products and services often included effective outreach campaigns or designs that took advantage of insights from behavioral economics such as automatic enrollment for retirement savings. Traditional approaches to financial literacy, however, were showing, at best, mixed results when rigorously evaluated by researchers. Leveraging mass media and entertainment formats was promising both from a cost per person reached standpoint and in terms of leading to retention of information and behavior change. For example, research done in South Africa showed that a soap opera was effective in raising awareness in the viewing population of key financial messages around retail credit, gambling, and savings. Reaching people through the media that they already consume and prefer, and ideally where they have an emotional connection such as with beloved characters in a soap opera, had been shown to be effective for public health – so it was not difficult to make the step to using these same communications tools for finance.
Q: In the USA, a lot of younger people have complained that the educational system doesn’t promote financial literacy very well, if at all. Gen Z and Millennial adults feel totally unprepared when they enter the working world and realize they don’t know how to pay their taxes, budget, start an effective savings plan, or invest responsibly.
Do you find that other countries’ educational systems do a better job of preparing kids for adult financial challenges, a worse job, or do they tend to end up at about the same level?
Margaret: The OECD conducts global tests of academic achievement and several years ago added a voluntary module on financial literacy. The 2018 results (the most recent ones available) show that the United States is right at the OECD average with a score of 506 but is a bit lower than might be expected given the US per capita income (below the curve in the figure below).
From a personal standpoint, I know that it can be hard to motivate students to take these courses. I have three daughters, and I remember that when one of them had a “financial literacy” course as an elective option in middle school she told me that while she knew this was important and [was] what I worked on, she was opting for a class on cartooning. I didn’t object – and my kids are pretty strong willed which I like to think I’ve encouraged – so she took cartooning. But her awareness of personal finance was there, due at least in part to conversations at home, and once she entered the working world, she sought information, advice, and coaching making her very savvy with her personal finances. One of my other daughters had an interest in business from an early age and developed an online clothes resale business when she was still in middle school. She negotiated when buying items, did research to set prices, and handled the payments. This was an amazing introduction to key skills such as negotiation and budgeting, which are critical for financial capability. She also elected to take an elective personal finance class in high school which provided useful tips.
One thing that I notice in my kids is a less emotional, more logical approach to money than I naturally have – which is a valuable asset for taking actions, making sound decisions, and weighing risks and returns. I think this is probably due to the experience from my youth of money being both incredibly important (since it was lacking) but also something that we didn’t always talk about openly or honestly. “Money isn’t important,” was something that was both true (it shouldn’t uniquely determine your choices or your options in life) but also not true, as it did have an impact on what we could do at given times.
Q: How can high schools, or even middle schools, improve financial literacy for students and engage them in this subject effectively? For international readers of this article, these levels of schooling roughly correspond to ages 11-18 for most kids.
Margaret: In the US there are many state-level mandates to teach financial literacy, which according to research have varying levels of effectiveness. More effective approaches include teaching finance topics within other academic courses such as math, social studies, or language arts with age-appropriate materials starting as young as elementary school and going through high school and college. Supporting teachers with training so that they are confident in discussing finance-related topics is also important, as well as looking for opportunities for experiential learning and applying lessons to the student’s life such as: opening a savings account, simulating investing, or managing the finances for a student-led business. Families are a critical source of financial information and can help instill good financial behaviors including: a savings habit, responsible use of credit, and having insurance to reduce risk (where it is available). Of course, many families run into financial difficulties, often through no fault of their own as was my case. When children see how adults can take measures to get back to a sounder financial footing? That is also incredibly valuable. It’s also important that both girls and boys receive these messages and support to engage with finance – in many countries a gender divide persists in financial skills, which can have a significant cost for girls and women over time.
“Children are naturally curious about things, including money. The idea of saving often resonates with children who enjoy planning for an important purchase... or seeing their money grow. Leveraging this initial interest with age-appropriate information and activities is important, including opening formal savings and payment accounts as children gain independence and move toward adulthood. ”
Q: There’s this assumption that most children or teenagers find money and finance “boring,” and they don’t have much interest in learning about the topic. Is that true? If it’s false, what’s the reality, in your experience? How can we engage young people in this vital topic?
Margaret: I don’t think this is the case, but it depends how it is presented, how students engage with the topic.
Children are naturally curious about things, including money. The idea of saving often resonates with children who enjoy planning for an important purchase, like my television, or seeing their money grow. Leveraging this initial interest with age-appropriate information and activities is important, including opening formal savings and payment accounts as children gain independence and move toward adulthood.
One of my favorite classroom memories is from my fifth-grade classroom, where my teacher, Mrs. Donley, created a student-run business offering breakfast. For a few cents we could buy poptarts, cereal, toast and jam or oatmeal. and milk, juice, or my favorite – hot chocolate. We loved having breakfast available and as studies have shown, feeding children in the morning can help with academic achievement. For some of us who didn’t like to get up any earlier than absolutely necessary, eating breakfast at school meant we could skip this step at home. For other students from low-income families, it may have been their only option. No one was turned away for lack of money – the profits were used to pay for children who couldn’t afford even the nickel charged for poptarts, and by the end of the year we still had money left over for a class gift. I’m not sure, but I think we bought a bigger toaster for the next year’s fifth-grade class. We also learned how to manage a (very) small business, what things cost, and what profit meant as opposed to just revenues from sales.
“Helping women to see finance as a topic that is approachable, understandable, and where they feel confident and capable, is key to improving outcomes.”
~Margaret Miller
Q: Of course, kids aren’t the only ones who need to learn about money. Plenty of adults lack a strong education in this arena, and it usually comes down to a lack of access to this kind of education, is that correct? Where do thought leaders, nonprofits, and state organizations fail when it comes to providing citizens with the resources they need for financial literacy? Why do you think we tend to miss the mark on this?
Margaret: This is a very complex question and one without a simple answer. There are actually many resources available for people to use to better understand and manage their personal finances, but they don’t always avail themselves of these resources. Advice from financial institutions may not direct people to the most advantageous or lowest cost options. And the plethora of financial products and services makes it more difficult to [make] a decision, as many people fear making a mistake with their money. Finding ways to reduce the mental burden of dealing with finances, as through automatic deductions for savings or bill payments, are important to improving financial outcomes. Getting advice from a financial professional whose incentives align with those of the consumer (and are not biased to one provider or product) and/or making use of one of the many financial apps focused on money and wealth management can be incredibly valuable. One of the key messages is the importance of saving and investing over time, so that the individual can benefit from compound interest.
Q: One of our writers recently brought up the concept of people’s personal relationships to money as being really important to their financial health. This idea of everyone having an emotional bond with their finances has been written about before, but it doesn’t appear to be a well-known model in the banking or financial consulting industry.
Have you given any thought to this idea of people having an emotional or psychological relationship with their money? How could the idea of emotional conditioning feature into your work as someone who seeks to innovate and develop people’s access to financial resources and literacy?
Margaret: The importance of emotional relationships with money is one that is widely known, especially in the investment advice industry. It’s not as uniformly incorporated into [the] financial literacy curriculum, so this presents an opportunity for strengthening impact in the future. In particular, working with people on procrastination and feelings of fear or inadequacy that can deter people from taking financial decisions that could benefit them, is a topic that deserves greater attention.
Q: This interview is made possible by our partner Akytech Consulting - a minority woman-owned company who embraces the importance of showcasing the voices and stories of women leaders through The Fem Word platform - because our stories intersect - no matter what profession or industry.
How can platforms like TFW––or partner organizations like Akytech Consulting––help women finance leaders spread financial literacy and achieve community access goals?
Margaret: A gender gap remains in consumer finance in many countries. Women have lower participation rates in pension programs, and lower levels of savings and investments. So increasing attention to finance in platforms that target women is incredibly important to closing this gap. Helping women to see finance as a topic that is approachable, understandable, and where they feel confident and capable, is key to improving outcomes. Increasing women’s participation throughout the financial industry including at the highest levels of management is also key and has been too slow to happen. For example, it was only last year (2020) when a major US bank was finally led by a woman (Jane Fraser at CitiBank). Working on access to finance and on the gender gap in finance through my career has made me even more aware of supporting my daughters as they develop their own personal financial skills.
Q: Now, there’s one big question we ask all of our guests here at The Fem Word. Margaret, could you tell us about a time when you felt truly powerful?
Margaret: This is an interesting question and one that made me engage in some self-reflection. I feel powerful most of the time because I feel in command of my life and my choices. I also agree with the proverb or saying that you can move quickly alone but move farther with others. Using one’s power effectively, in my experience, involves engaging with others, listening, collaborating and developing a shared vision and approach to solving a problem. I think women are especially good at using this kind of power, which is increasingly what is needed to address problems in society and in business. I expect that women will continue to advance to leadership at the highest levels, moving toward gender parity, albeit in the face of obstacles in many cases that remain, and this will benefit us all.
This interview is made possible by our partner Akytech Consulting, a minority, woman-owned consulting company in the DC area which allows The Fem Word to highlight women leaders.
The views, thoughts, and opinions expressed in this article belong solely to the interviewee, and do not necessarily reflect the position of The Fem Word organization. Any content provided by our interviewees are based on their opinions and are not intended to malign any religion, ethnic group, club, organization, company, individual or anyone or anything.