How to Help the Poor to Save a Bit: Evidence from a Field Experiment in Kenya

34 Pages Posted: 7 Jul 2016

See all articles by Merve Akbaş

Merve Akbaş

Duke University - Department of Economics

Dan Ariely

Duke University - Fuqua School of Business

David A. Robalino

World Bank

Michael Weber

World Bank - Social Protection Unit (HDNSP)

Abstract

Partnering with a savings product provider in Kenya, we tested the extent to which behavioral interventions and financial incentives can increase the saving rate of individuals with low and irregular income. Our experiment lasted for six months and included a total of twelve conditions. The control condition received weekly reminders and balance reporting via text messages. The treatment conditions received in addition one of the following interventions: (1) reminder text messages framed as if they came from the participant's kid (2) a golden colored coin with numbers for each week of the trial, on which participants were asked to keep track of their weekly deposits (3) a match of weekly savings: The match was either 10% or 20% up to a certain amount per week. The match was either deposited at the end of each week or the highest possible match was deposited at the start of each week and was adjusted at the end. Among these interventions, by far the most effective was the coin: Those in the coin condition saved on average the highest amount and more than twice as those in the control condition. We hypothesize that being a tangible track-keeping object; the coin made subjects remember to save more often. Our results support the line of literature suggesting that saving decisions involve psychological aspects and that policy makers and product designers should take these influences into account.

Keywords: savings, field experiment, behavioral economics

JEL Classification: G21, B49, D03

Suggested Citation

Akbas, Merve and Ariely, Dan and Robalino, David A. and Weber, Michael, How to Help the Poor to Save a Bit: Evidence from a Field Experiment in Kenya. IZA Discussion Paper No. 10024. Available at SSRN: https://ssrn.com/abstract=2803856

Merve Akbas (Contact Author)

Duke University - Department of Economics ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Dan Ariely

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
(919) 381-4366 (Phone)

David A. Robalino

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Michael Weber

World Bank - Social Protection Unit (HDNSP) ( email )

Human Development Network
1818, H Street, N.W.
Washington, DC 20433
United States

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