Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device

47 Pages Posted: 13 Oct 2012

See all articles by Felipe Kast

Felipe Kast

Pontifical Catholic University of Chile

Stephan Meier

Federal Reserve Bank of Boston; IZA Institute of Labor Economics; Columbia Business School - Management

Dina Pomeranz

Harvard University - Business School (HBS)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2012

Abstract

We test the effectiveness of self-help peer groups as a commitment device for precautionary savings, through two randomized field experiments among 2,687 microentrepreneurs in Chile. The first experiment finds that self-help peer groups are a powerful tool to increase savings (the number of deposits grows 3.5-fold and the average savings balance almost doubles). Conversely, a substantially higher interest rate has no effect on most participants. A second experiment tests an alternative delivery mechanism and shows that effects of a similar size can be achieved by holding people accountable through feedback text messages, without any meetings or peer pressure.

Suggested Citation

Kast, Felipe and Meier, Stephan and Pomeranz, Dina, Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device (September 2012). NBER Working Paper No. w18417, Available at SSRN: https://ssrn.com/abstract=2161193

Felipe Kast (Contact Author)

Pontifical Catholic University of Chile ( email )

Ave. Vicuna Mackenna 4860, Macul
Santiago
Chile

Stephan Meier

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Columbia Business School - Management ( email )

3022 Broadway
New York, NY 10027
United States

Dina Pomeranz

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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