Can Making Family Salient Increase Financial Savings? Quantifying Heterogeneous Treatment Effects in Voluntary Retirement Contributions Using a Field Experiment in Mexico

53 Pages Posted: 4 Oct 2019

See all articles by Avni Shah

Avni Shah

University of Toronto at Scarborough - Division of Management; University of Toronto - Rotman School of Management

Matthew Osborne

University of Toronto at Mississauga - Department of Management

Jaclyn Lefkowitz

ideas42

Alissa Fishbane

ideas42

Dilip Soman

University of Toronto - Behavioural Economics in Action at Rotman (BEAR)

Date Written: September 25, 2019

Abstract

We use evidence from a large-scale field experiment in Mexico (N=97,149) to test the effectiveness of various behavioral interventions on voluntary retirements savings contributions. Specifically, we use SMS reminders to test whether previously successful behavioral interventions (e.g., basic alerts, pennies-a-day, fresh start, individual goal security) or a previously undocumented behavioral intervention-framing retirement savings as a way to 'secure your family's financial future'-influences contribution rates in comparison to those who did not receive a text. We found that a family security SMS intervention significantly increased voluntary contribution savings and was more effective than previously used interventions. Using recently developed machine-learning techniques to quantify the heterogeneity in the treatment, we found that women under the age of 29 were nearly 67% less likely to contribute when given this family intervention compared to no intervention at all, while individuals between 29-41 were 68% more likely to contribute, regardless of gender. The heterogeneity in the treatment effects has important managerial implications: We demonstrate that sending this intervention to all account holders would increase profits by $375,800 pesos ($19,032 USD). In contrast, a strategic application of this intervention to pro table individuals only would increase profits by $4,887,000 pesos ($246,000 USD). From a consumer welfare perspective, this strategic application would also generate 4,597 new voluntary retirement contributors (the blanket approach would generate 2,340 new contributors).

Keywords: field experiment, machine learning, retirement savings

JEL Classification: C93, D14, H55, O16, O54

Suggested Citation

Shah, Avni and Osborne, Matthew and Lefkowitz, Jaclyn and Fishbane, Alissa and Soman, Dilip, Can Making Family Salient Increase Financial Savings? Quantifying Heterogeneous Treatment Effects in Voluntary Retirement Contributions Using a Field Experiment in Mexico (September 25, 2019). Available at SSRN: https://ssrn.com/abstract=3460722 or http://dx.doi.org/10.2139/ssrn.3460722

Avni Shah

University of Toronto at Scarborough - Division of Management ( email )

1265 Military Trial
Scarborough, Ontario M1C 1A4
Canada

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Matthew Osborne (Contact Author)

University of Toronto at Mississauga - Department of Management ( email )


Canada

Jaclyn Lefkowitz

ideas42 ( email )

80 Broad Street
Suite 3000
New York, NY 10004
United States

Alissa Fishbane

ideas42 ( email )

80 Broad Street
Suite 3000
New York, NY 10004
United States

HOME PAGE: http://www.ideas42.org

Dilip Soman

University of Toronto - Behavioural Economics in Action at Rotman (BEAR) ( email )

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