What Might We Forget? An Experiment in South Africa Shows that Reminders May Increase Attention and Decrease Savings, But a Lottery May Counteract These Effects

Abstract

Using administrative data on the savings behaviour of 41,672 South Africans at the onset of COVID, this experimental study demonstrates how reminders can decrease savings in a crisis. Building on an attention-based model for the effect of reminders, it shows how if individuals have forgotten prior savings, a savings reminder can increase dis-saving when received at a time when those savings may be needed. The study also suggests that enhancing a savings reminder with a lottery incentive for 4 months will undo the negative effects of a savings reminder on savings during a crisis.

Keywords: Reminder, South Africa, BANKING, Savings, Lottery, behavioral finance, Experimental Study