Mar 2, 2012

Mobile phones

In this paper, we document how a new technology - mobile phones - reduces transaction costs and enables Rwandans to share risk quickly over long distances. We examine a comprehensive database of person-to-person transfers of mobile airtime and find that individuals send this rudimentary form of “mobile money” to friends and family affected by natural disasters. Using the Lake Kivu earthquake of 2008 to identify the effect of a large covariate shock on interpersonal transfers, we estimate that a current-day earthquake would result in the transfer of between $22,000 and $30,000 to individuals living near the epicenter. We further show that the pattern of transfers is most consistent with a model of reciprocal risk sharing, where transfers are determined by past reciprocity and geographical proximity, rather than one of pure charity or altruism, in which transfers would be expected to be increasing in the wealth of the sender and decreasing in the wealth of the recipient.
That is from the paper by Fafchamps, Blumenstock, and Eagle, "Risk and Reciprocity Over the Mobile Phone Network: Evidence from Rwanda" (September 2011). This is a neat visualization of the call traffic in Rwanda ("the earthquake occurs at roughly 9:30am, about 25 seconds into the video")
Blumenstock has also used mobile-phone call-records to infer pattern of migration in Rwanda (see a visualization here).  

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