Can Pre-Commitment Increase Savings Deposits? Evidence from a Tax Time Field Experiment

43 Pages Posted: 7 Oct 2019

See all articles by Stephen Roll

Stephen Roll

Washington University in St. Louis

Michal Grinstein-Weiss

Washington University in St. Louis - George Warren Brown School of Social Work

Emily Gallagher

University of Colorado at Boulder - Department of Finance; Federal Reserve Banks - Federal Reserve Bank of St. Louis

Cynthia Cryder

Washington University in St. Louis - John M. Olin Business School

Date Written: October 4, 2019

Abstract

This paper presents the results of an experiment testing the roles of a savings pre-commitment and different savings-focused choice architectures on the savings deposit decisions of 845,786 low- and moderate-income (LMI) tax filers. Results suggest that pre-committing to save at the start of the tax filing process can, among certain populations, dramatically increase savings rates. Among early tax filers, pre-commitment is associated with a 20.6 percentage point increase in savings deposits and a $418.86 increase in the amount deposited to savings. We observe more modest effects of pre-commitment on a general sample of tax filers. We also see strong evidence that choice architectures emphasizing savings strongly impact the deposit decisions of tax filers. The experiment also revealed cautionary evidence that the structure of pre-commitment can solidify decisions, making it then harder to later nudge those who opt-out of savings to change their minds. These findings may be broadly applicable to settings beyond the tax time moment – such as to applications that seek to encourage particular behaviors (like work or exercise) on the part of its participants.

Keywords: behavioral interventions, defaults, anchors, commitment

JEL Classification: D1

Suggested Citation

Roll, Stephen and Grinstein-Weiss, Michal and Gallagher, Emily and Cryder, Cynthia, Can Pre-Commitment Increase Savings Deposits? Evidence from a Tax Time Field Experiment (October 4, 2019). Available at SSRN: https://ssrn.com/abstract=3464634 or http://dx.doi.org/10.2139/ssrn.3464634

Stephen Roll

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

Michal Grinstein-Weiss

Washington University in St. Louis - George Warren Brown School of Social Work ( email )

St. Louis, MO 63130
United States

Emily Gallagher (Contact Author)

University of Colorado at Boulder - Department of Finance ( email )

Campus Box 419
Boulder, CO 80309
United States

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

Cynthia Cryder

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

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