Stretching Savings to Shrink the Hungry Season
Harvest time for Zambia’s maize farmers feels like a time of plenty, but it comes on the heels of a hungry season that ends as soon as families begin shelling dried cobs.
The hungry season, also called the lean season, is the period right before the harvest when last year’s maize runs low. The hungry season is common in the rural parts of many countries, and for many families it comes every year.
“It’s difficult for people to learn from the past,” said Kristina Hallez, a program manager for the Center for Effective Global Action (CEGA) and a researcher on the project. “Every year you might experience the hungry season but it’s difficult to make changes the next year.”
Hallez took part in new research in Zambia that tested a budgeting activity with maize-farming families at the time of harvest. The study found that by thinking through the details of last year’s spending when budgeting for the coming year’s expenses, people could stretch their savings for an extra month and increase the size of next year’s harvest.
Splitting up the Year’s Budget
The research team led by University of California (UC) Berkeley, UC Santa Barbara and the University of Zambia were testing the idea that budget shortfalls during the hungry season may be partially caused by a phenomenon called the “planning fallacy.” Research in psychology on the planning fallacy shows that over-optimism about the future is common everywhere. For example, people often systematically underestimate how much time a complex task will take or the cost of some future expense.
In Zambia, maize farming families pay for all the year’s expenses from a single maize harvest. That single harvest represents food as well as a form of savings they can sell to pay for expenses like school fees, household goods and even inputs for next year’s maize planting.
The research team thought that there may be a disconnect between the seeming abundance of bags of maize at the time of harvest and the coming year’s expenses. Based on research in psychology, they devised a budgeting activity that would help farming families put the year’s costs in perspective.
The team asked roughly half of the study’s 837 maize-farming households to recall expenses from the year before and then forecast their spending in the coming year across seven major categories. The other half of households, who did not take part in the budgeting activity, provide a comparison to show the impacts of the activity itself.
The budgeting activity had an immediate impact. Participants who did not take part in the activity overestimated their future savings by an average of 81 percent. Participants who did the budgeting activity increased their estimates of the year’s non-food expenses by between 20 and 60 percent.
A Shorter Hungry Season from Detailed Budgets at Harvest
The budgeting activity had a noticeable impact on people’s savings. Four months after harvest time, households who did the budgeting activity entered the hungry season with 20 percent more in savings than households who did not. This difference was roughly one month of spending during the hungry season. The people who had the biggest increase in savings were those who were more likely to initially underestimate the year’s expenses.
The budgeting activity also increased farm output in the following year by 9 percent. When the team looked into why, they found that the increased savings reduced the need to take off-farm labor jobs and increased spending on hired labor and inputs that increased maize yields. This means that addressing how people budget can increase the next season’s yields and savings.
Currently, the research team seeks partners to scale the budgeting activity in other contexts. It’s simple and seamless enough that it can be added to existing development programs.
“There’s something really helpful about sitting down and doing this budgeting activity to project into the future with the prompt of considering what happened in the past,” said Hallez. “For the families in our study, it really made a difference.”
The research team will share results from this research in an Agrilinks webinar on April 20, 2023. Register now!
This research was funded by the Feed the Future Innovation Lab for Markets, Risk & Resilience, the United States Agency for International Development’s Development Innovation Ventures (DIV), the Center for Effective Global Action (CEGA) at UC Berkeley, the National Science Foundation and the International Growth Centre.