Why Don’t the Poor Save More? Evidence from Health Savings Experiments

Dupas, Pascaline; Welch, Keesler; Quddus, Shammi

doi:10.1257/rct.1169

Cited by 132 publications

(214 citation statements)

References 16 publications

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“…Savings programs with commitment mechanisms often entail mental accounting methods, such as “labeling,” which segregates sums of money for specific goals, decreases fungibility, and thereby protects savings from the requests of friends or family (Ashraf et al., ; Dupas & Robinson, ). As cultural norms in sub‐Saharan Africa may obligate individuals to give what is readily available (Mpiira et al., ; Platteau, ), the mental allocations of funds through labeling or more formalized savings commitment devices, such as timed deposits or conditional withdrawals, can decrease this sense of “availability” (Ashraf et al., ; Dupas & Robinson, ) and help foster routinized savings.…”

Section: Situating Savings Within a Behavioral Economics Contextmentioning

confidence: 99%

Effects of Financial Incentives on Saving Outcomes and Material Well‐Being: Evidence From a Randomized Controlled Trial in Uganda

Wang¹,

Ssewamala²,

Neilands³

et al. 2018

J Policy Anal Manage

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The use of savings products to promote financial inclusion has increasingly become a policy priority across sub-Saharan Africa, yet little is known about how families respond to varying levels of savings incentives and whether the promotion of incentivized savings in low-resource settings may encourage households to restrict expenditures on basic needs. Using data from a randomized controlled trial in Uganda, we examine: 1) whether low-income households enrolled in an economic-empowerment intervention consisting of matched savings, workshops, and mentorship reduced spending on basic needs and 2) how varied levels of matching contributions affected household savings and consumption behavior. We compared primary school-attending AIDS-affected children (N = 1,383) randomized to a control condition with two intervention arms with differing savings-match incentives: 1:1 (Bridges) and 1:2 (Bridges PLUS). We found that: 1) 24 months post-intervention initiation, children in Bridges and Bridges PLUS were more likely to have accumulated savings than children in the control condition; 2) higher match incentives (Bridges PLUS) led to higher deposit frequency but not higher savings in the bank; 3) intervention participation did not result in material hardship; and 4) in both intervention arms, participating families were more likely to start a family business and diversify their assets.

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Section: Situating Savings Within a Behavioral Economics Contextmentioning

confidence: 99%

Effects of Financial Incentives on Saving Outcomes and Material Well‐Being: Evidence From a Randomized Controlled Trial in Uganda

Wang¹,

Ssewamala²,

Neilands³

et al. 2018

J Policy Anal Manage

View full text Add to dashboard Cite

show abstract

“…Relative to a control group not offered the commitment savings product, those offered the commitment account had bank balances that were 82% higher 12 months later. Corroborating work on commitment savings products in other countries includes Gugerty (2007), Ashraf et al (2011), Brune et al (2011), and Dupas & Robinson (2013). This research provides a rationalization for restrictions on the ability to access retirement savings account balances before reaching retirement age.…”

Section: Behaviorally Informed Policy Tools To Help Agents Executementioning

confidence: 92%

Applying Insights from Behavioral Economics to Policy Design

Madrian

2014

Annu. Rev. Econ.

184

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The premise of this article is that an understanding of psychology and other social science disciplines can inform the effectiveness of the economic tools traditionally deployed in carrying out the functions of government, which include remedying market failures, redistributing income, and collecting tax revenue. An understanding of psychology can also lead to the development of different policy tools that better motivate desired behavior change or that are more cost-effective than traditional policy tools. The article outlines a framework for thinking about the psychology of behavior change in the context of market failures. It then describes the research on the effects of a variety of interventions rooted in an understanding of psychology that have policy-relevant applications. The article concludes by discussing how an understanding of psychology can also inform the use and design of traditional policy tools for behavior change, such as financial incentives.

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“…Households in low-income contexts are particularly vulnerable: smoothing mechanisms like savings, credit, insurance, and informal financial networks often function poorly in these contexts (Dupas and Robinson, 2013; Kochar, 1999, 2004; Pande and Burgess, 2005; Paxson, 1992; Townsend, 1994). Moreover, income-generating activities within the household are often intertwined: parents and children work together on family farms, and extended family members pool resources in business (Adhvaryu et al, 2013; Benjamin, 1992; Dercon and Krishnan, 2000).…”

Section: Introductionmentioning

confidence: 99%

Health, Enterprise, and Labor Complementarity in the Household

Adhvaryu

Nyshadham

2017

Journal of Development Economics

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We study the role of household enterprise as a coping mechanism after health shocks. Using variation in the cost of traveling to formal sector health facilities to predict recovery from acute illness in Tanzania, we show that individuals with prolonged illness switch from farm labor to enterprise activity. This response occurs along both the extensive (entry) and intensive (capital stock and labor supply) margins. Family members who are not ill exhibit exactly the same pattern of responses. Deriving a simple extension to the canonical agricultural household model, we show that our results suggest complementarities in household labor.

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Why Don’t the Poor Save More? Evidence from Health Savings Experiments

Cited by 132 publications

References 16 publications

Effects of Financial Incentives on Saving Outcomes and Material Well‐Being: Evidence From a Randomized Controlled Trial in Uganda

Effects of Financial Incentives on Saving Outcomes and Material Well‐Being: Evidence From a Randomized Controlled Trial in Uganda

Applying Insights from Behavioral Economics to Policy Design

Health, Enterprise, and Labor Complementarity in the Household

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