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How to enhance the financial well-being of refugees

Shashi Matta and Jens Hogreve
Posted on May 06, 2019

Refugees seeking asylum form a substantial, extremely vulnerable population. Last year alone, there were 580,000 people trying to rebuild their lives in Europe. Yearning for stability, acceptance, and hope, they encounter a whole range of barriers inhibiting their integration (think language and culture), their education and skills (think transferability), and their physical, emotional and financial well-being.

In our research project, we aim to enhance their financial well-being by improving their current saving and spending behaviour, and boosting their confidence to build a better financial future. In doing so, we believe that it will positively affect their overall well-being (also called ‘subjective well-being’). To uncover potential inhibitors that may affect the financial well-being of refugees, our research builds on behavioural research in consumer behaviour and social psychology. We focus on two factors: stereotype threat and lay theories of the self.

When you are being judged…

Stereotype threat is “a situational predicament in which individuals are at risk of confirming negative stereotypes about their group”. According to previous research, it is “the resulting sense that one might be judged in terms of negative stereotypes about one’s group instead of on personal merit” (Inzlicht and Schmader 2011).

Given the prevalence of negative stereotypes about refugees in general, we believe that refugees seeking asylum in a developed country experience considerable stereotype threat as they attempt to (re)build their lives and to integrate into a new society. This inhibits their confidence and ability in various ways, adding to their already stressful financial reality.

Fixed versus growth mindset

Research on the second factor, implicit lay theories of the self, suggests that having a “fixed” mindset – as opposed to a “growth” mindset – can inhibit one’s belief in the ability to acquire new skills and change status quo (Dweck, Chiu, and Hong 1995; Molden and Dweck 2006). We believe that having a growth mindset can directly impact our target group’s beliefs about their ability to improve their financial situation, and in turn, their financial behaviours.

In our research we propose that we can mitigate the negative effects of stereotype threat and lay theories through a behavioural intervention, using principles of mindfulness (Brown and Ryan 2003), learning (Hirsch-Pasek, Zosh, Golinkoff, Gray, Rob, and Kaufman 2015), and gamification (Boller and Kapp 2017). Mindfulness, defined as “enhanced attention to, and open awareness of current experience or present reality” (Brown and Ryan 2003), has been demonstrated to help with anxiety (Brown, Ryan and Creswell 2007), food consumption and physical health (e.g., van De Veer, van Herpen and van Trijp 2015; Woolhouse, Knowles and Crafti 2012), and well-being through self-regulation (see Brown and Ryan 2003). We’ve developed a framework of how mindfulness combats the potential negative impact of stereotype threat and interacts with implicit theories of the self to affect well-being.

Our intervention will be facilitated with a digital app that will also measure stereotype threat experienced by refugees in our study (von Hippel, von Hippel, Conway, Preacher, Schooler and Radvansky 2005; Smith 2004), their lay theories or mindset (Levy, Stroessner and Dweck 1998), their mindfulness (Brown and Ryan 2003), and their financial well-being (Netemeyer, Warmath, Fernandes and Lynch 2017).

“Our intervention is meant to boost refugees' confidence to build a better financial future.”

From idea to impact

To understand the refugees’ concerns about (financial) well-being, we started our research process by conducting a series of focus groups with refugees in Germany. We then designed the main research study, including the methodology and the intervention principles of the app. The app, designed by a digital startup at an incubator in Ingolstadt, combines principles of digital learning and gamification. It includes a mindfulness exercise and nudges for financial behaviour. We are currently conducting multiple pretests to refine the app, which will be used in the main study with refugees in Germany.

Multiple stakeholders are involved in the settlement, integration, and well-being of refugees, including government agencies (e.g., BAMF in Germany) non-governmental organizations (e.g., International Organization for Migration), volunteer organizations (e.g., Caritas International), research centres in academia (e.g., Center for Flight and Migration at the Catholic University of Eichstätt-Ingolstadt), and corporations (e.g., ING’s focus on environmental, social and economic sustainability). Our research will offer evidence-based, practical implications to these stakeholders in helping them improve the financial well-being of refugees.

And more…

The specific target group in our research is only one example of a population that experiences the negative effect of stereotype threat. Research on stereotype threat has shown its detrimental effect in populations such as disadvantaged racial and ethnic minorities, the disabled, and the poor. We believe that our research offers valuable insights to improving the financial well-being of all such groups, not only in Europe but internationally. We are very hopeful that our research will inspire policy makers, social innovators, and citizens to make a positive difference in the financial and overall well-being of vulnerable individuals and families.