Nudging Youth to Develop Savings Habits: Experimental Evidence Using SMS Messages

54 Pages Posted: 26 Aug 2015

See all articles by Catherine Rodriguez

Catherine Rodriguez

Universidad de los Andes, Colombia - Department of Economics

Juan Saavedra

University of Southern California - Department of Economics; Center for Economic and Social Research (CESR)

Date Written: August 2015

Abstract

We report results from a field experiment that articulates financial information delivery through cellphone text messages and financial decisions among low-income youth in Colombia. Youth accountholders are randomly assigned to one of four experimental conditions: i) twelve monthly financial education messages, ii) twelve monthly savings reminders, iii) twenty-four semimonthly reminders and iv) control. After twelve months, account balances of youth assigned to receive monthly and semimonthly reminders increase by 28 and 43 percent, respectively, relative to controls. Financial education messages do not increase account balances. At least two thirds of account balance increases in reminder groups are net savings increases. Savings effects of reminders last even eight months after youth stop receiving messages, the latest we can observe.

Keywords: Financial Education, Reminders, SMS, Youth, Savings, Field Experiments

JEL Classification: D14, E21, I29, O16

Suggested Citation

Rodriguez, Catherine and Saavedra, Juan, Nudging Youth to Develop Savings Habits: Experimental Evidence Using SMS Messages (August 2015). CESR-Schaeffer Working Paper No. 2015-018. Available at SSRN: https://ssrn.com/abstract=2650188 or http://dx.doi.org/10.2139/ssrn.2650188

Catherine Rodriguez

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

Juan Saavedra (Contact Author)

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States

Center for Economic and Social Research (CESR)

635 Downey Way
Los Angeles, CA 90089-3332
United States

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