Saving and Well-Being at the Base of the Pyramid: Implications for Transformative Financial Services Delivery

Although much saving research has been conducted in affluent nations, little is known about consumer saving and well-being at the base of the pyramid, which includes over 3 billion people who live on less than US$2.50 per day. Research evidence suggests that financial situation, and especially saving, is central to well-being in impoverished societies; however, to our knowledge, this relationship has not been tested with a global sample. Thus, in this study, we consider how societal poverty, individual saving ability, and satisfaction with one’s household financial situation influence well-being. Further, we examine how poverty moderates the relationship between individual financial drivers and well-being to test the saving-well-being centrality assumption. Our multilevel study uses hierarchical linear models with about 50,000 consumers across 38 countries and demonstrates that as societal poverty increases, well-being decreases. Yet in high-poverty societies, saving greatly improves well-being. This significant finding among saving, poverty, and well-being is particularly telling, as household financial satisfaction was not moderated by societal poverty. As a result, we suggest novel transformative financial services that should improve the lives of the poor through formal saving mechanisms that are grounded in their lived experiences.