# **5 Externalities from Consumer Learning**

In this section, we explore the possible market-level externalities of consumer learning. Our results so far show that the introduction of payroll accounts has positive impacts on learning and real outcomes on average, but also highlights that these benefits are concentrated among consumers with comparatively higher baseline levels of financial literacy and experience. Less experienced consumers who might depend on the help of peers or commission motivated agents to use the technology, on the other hand, remain exposed to numerous consumer protection risks. In light of these results, an interesting question is whether inexperienced customers benefit from the _average_ customer becoming more informed as a result of the financial technology being rolled out at scale.

We examine this question using a separate audit study that takes advantage of local variation in the extent of payroll account adoption. In the audit study, workers were trained to approach mobile money agents located in areas with different levels of payroll account adoption and ask for assistance with a simple remittance transaction. The workers were trained on two scripts: a _low skill_ script that signaled very limited prior experience with the technology and a _high skill_ script which indicated that the worker was an experienced user of the technology, who had previously used their own account to send and receive money.<sup>50</sup> We conducted the audit study in a suburban area surrounding our main study site, which is one of the largest industrial areas in the country. We divided this area into 24 roughly equalsized zones with each zone corresponding to a self-contained neighborhood, and obtained data on total employment, number of manufacturing firms, and number of firms that had adopted payroll accounts in each neighborhood.<sup>51</sup> We use this information to calculate payroll account penetration for each neighborhood and assign each auditor to attempt an equal proportion of transactions in neighborhoods with high (above median) and low (below median) payroll account adoption. In total, auditors attempted 504 transactions over a six-month period, of which 154 (31%) were successful in the sense that the transaction was completed and the full amount was remitted to the recipient. The outcome of interest is whether the sender was charged a fee in addition to the recipient cash-out charge, which is a practice explicitly prohibited by the mobile money provider.

The results suggest that there are positive externalities from the widespread adoption of digital payroll accounts. Figure 7 plots unconditional means for the frequency of illicit transaction fees in high and low payroll account adoption areas and shows that, unconditionally, workers are 16 percentage points less likely to be charged an illicit fee in areas with high payroll account adoption. Table 9 reports treatment effect estimates that control for auditor fixed effects. The results from this exercise, reported in column (1), show that the same worker is 15 percentage points more likely to be charged an illicit fee when attempting a transaction in a neighborhood with low payroll account adoption. The results in column (2) show that workers who signal a lack of experience

> 50The scripts used in the audit study are available in the appendix.

> 51Data were obtained from the national industry association and verified by survey staff on the ground.

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