Professor Cam Donaldson Interview

World’s Leading Health Economist joins GCU

Professor Cam Donaldson has been appointed as the new Yunus Chair for Research in Social Business and Health at GCU and will take up his role in May. This unique professorial Chair is named for Grameen Bank founder Professor Muhammad Yunus, in recognition of the Nobel Peace Prize winner’s close working relationship with the University.

Professor Cam Donaldson is former Director of the Institute of Health & Society and Health Foundation Chair in Health Economics at Newcastle University.

Here Professor Donaldson discusses his new role at GCU.

Welcome to your new post. What does your job involve as the Yunus Chair in Social Business and Health?

I will lead Glasgow Caledonian University’s new Yunus Centre, working across the new research Institutes of Applied Health Research (led by Professor Francine Cheater) and Society and Social Justice (led by Professor Jackie Tombs). The distinctive research programme of the Centre will be twofold: First - to evaluate the health-related, economic and social benefits of microfinance in disadvantaged communities in Scotland and elsewhere; and, second, more generally to develop and apply economics for use in health care planning and delivery. The Yunus Centre will bring together a multidisciplinary team of researchers, including international collaborators, and will capitalise on Glasgow Caledonian University’s strength in allied health research, rated in the top ten in the UK in the 2008 Research Assessment Exercise.

What agendas will you be working on in this new role?

The aim is to build a unique research programme across microcredit and health evaluating the impact of social business creation on the lives and health of disadvantaged communities in Glasgow, the UK and overseas. Part of the new Centre’s focus will be to evaluate the impact of the Grameen Bank which Professor Yunus is setting up in Glasgow, one of the first attempts to apply the microcredit model in a Western context.

What is microcredit?

Microcredit is simply a form of small loan which is distributed to people in the community who are below a particular level of income. Anyone can place deposits with the bank, but only poor people can receive loans. These loans carry no collateral.

It sounds too good to be true, so how does microcredit work?

Grameen is a perfect example, having been founded in 1989 and now operating in over thirty countries worldwide. Microcredit institutions are sustained largely by charging slightly higher interest rates (given that they are taking on worse risks) than elsewhere in the economy. The system also relies on more community-oriented notions of trust and social capital to ensure its success. Borrowers seem to buy into these notions, leading to payback rates over 90% in many jurisdictions. Although it may be perceived that such notions play less of a role in more advanced economies, this is not necessarily so. There is a culture of similar ways of saving and redistributing saved funds within more-deprived communities, especially amongst women, which would indicate that such an innovation may not be culturally alien.

Can microcredit improve public health?

This the main question to be addressed by the research programme we hope to develop. To answer the question, we first need to establish the plausible mechanisms of getting from engaging with microcredit to improvements in health and longevity, and then how to measure the degrees to which these mechanisms work in practice. Some such mechanisms are more obvious than others. For instance, we know income is strongly related to health. Indeed, many have gone as far as to suggest that income redistribution is the surest way to achieve reductions in health inequalities. There is also evidence that societies which are more equal in terms of income redistribution and perceptions of social position also do better in terms of overall health measures. However, politically, there seems no desire for (income) redistributive policies along these lines in many such countries. This will be reinforced in coming years, with the emphasis being on using any extra taxation monies to pay down the national debt. One way round this, therefore, is to consider microcredit. This, at least, redistributes income from savers (and other donors) to borrowers and, in cases of successful enterprises built upon such credit, ensures income enhancement for beneficiaries and their families. Less obvious is that if we think access to microcredit will improve health in the longer term then it must also influence more intermediate outcomes related to health and lifestyle bahviours, but we know very little about that.

And finally, how will you begin to link microbanking with health especially in the UK and the rest of Western economy?

This presents a huge research agenda which will take place over a 5-10 year period. But there are three main aims to be addressed:

• The first is to examine the plausibility of microcredit in terms of how it fits into Western-style economies and with the needs of the community in respect of health improvement and access to credit;
  
  
• The second is to establish a long-term database from regular surveys of individuals who come into contact with microcredit, covering changes in their sources of income and employment status, as well as their self-assessed health and lifestyle aspects related to health, the intention being to compare changes in these factors to trends in similar measures in the general population and in those without access to microcredit;
  
  
• Third, we aim to conduct regular in-depth interviews with smaller numbers of people to establish a richer description of the impact of microcredit on their lives. We will seek resources for this work from a variety of research funding and philanthropic sources.

Get more information about Professor Cam Donaldson and the work he will be doing at GCU