Tying Odysseus to the Mast: Evidence From a Commitment Savings Product in the Philippines

Abstract

We designed a commitment savings product for a Philippine bank and implemented it using a randomized control methodology. The savings product was intended for individuals who want to commit now to restrict access to their savings, and who were sophisticated enough to engage in such a mechanism. We conducted a baseline survey on 1777 existing or former clients of a bank. One month later, we offered the commitment product to a randomly chosen subset of 710 clients; 202 (28.4 percent) accepted the offer and opened the account. In the baseline survey, we asked hypothetical time discounting questions. Women who exhibited a lower discount rate for future relative to current tradeoffs, and hence potentially have a preference for commitment, were indeed significantly more likely to open the commitment savings account. After twelve months, average savings balances increased by 81 percentage points for those clients assigned to the treatment group relative to those assigned to the control group. We conclude that the savings response represents a lasting change in savings, and not merely a short-term response to a new product.

Impulsive consumption and reflexive thought: Nudging ethical consumer behavior

“…While hard commitments have real economic penalties for failure, soft commitments rely on the psychological consequences of not sticking to one's commitments (Bryan et al, 2010). Examples of external devices include saving accounts that restrict withdrawals (Ashraf et al, 2006), Christmas saving clubs, informal bets, and voluntarily putting one's name on a list of people who are banned from gambling in casinos (Thaler and Sunstein, 2008). As a commitment device to reduce one's impulsive wine consumption, one can take only a limited amount of money and no credit card to the restaurant.…”

Holding the Hunger Games Hostage at the Gym: An Evaluation of Temptation Bundling

“…Indeed, past research has demonstrated that people value mechanisms that prevent their future selves from making unwise decisions such as procrastinating (Ariely and Wertenbroch 2002), undersaving (Ashraf et al 2006, Beshears et al 2011, smoking cigarettes (Giné et al 2010), failing to achieve workplace goals (Kaur et al 2010), and giving in to repeated temptations in the laboratory (Houser et al 2010). Study participants have expressed a willingness to use "commitment devices" such as placing money in restrictive accounts that prevent premature savings withdrawals (Ashraf et al 2006, Beshears et al 2011; self-imposing deadlines with associated late penalties to prevent procrastination on coursework (Ariely and Wertenbroch 2002); and placing money on the line for forfeiture if they fail to quit smoking, exercise, or lose weight (Halpern et al 2012, John et al 2012, Royer et al 2012, Volpp et al 2008.…”

“…Study participants have expressed a willingness to use "commitment devices" such as placing money in restrictive accounts that prevent premature savings withdrawals (Ashraf et al 2006, Beshears et al 2011; self-imposing deadlines with associated late penalties to prevent procrastination on coursework (Ariely and Wertenbroch 2002); and placing money on the line for forfeiture if they fail to quit smoking, exercise, or lose weight (Halpern et al 2012, John et al 2012, Royer et al 2012, Volpp et al 2008.…”

“…We then presented them with an opportunity to pay for an exercise program: if they enrolled in the program, study staff would hold their iPod for one month in a monitored locker at the university gym, ensuring they never listened at home and had something to look forward to during exercise. Sixty-four percent of participants indicated that this program "sound[ed] appealing" to them when asked on a "yes/no" scale (t 211 = 19 43; p < 0 0001), demonstrating that temptation bundling devices are valued and adding to the mounting evidence of demand for commitment devices (Ariely and Wertenbroch 2002, Ashraf et al 2006, Beshears et al 2011, Giné et al 2010, Halpern et al 2012, Houser et al 2010, John et al 2012, Kaur et al 2010, Volpp et al 2008.…”

Masters of our time: Impatience and self-control in high-level chess games

“…If one of the sexes is more impatient or time inconsistent than the other then consumption and savings could differ substantially during a lifetime. 1 With their empirical paper, Ashraf et al (2006) showed that saving behavior can indeed be affected by time inconsistency. In detail, they find that women are, or at least consider themselves to be, more time inconsistent when studying savings among bank clients in the Philippines.…”