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Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device

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  • Felipe Kast
  • Stephan Meier
  • Dina Pomeranz

Abstract

We test the effectiveness of self-help peer groups as a commitment device for precautionary savings, through two randomized field experiments among 2,687 microentrepreneurs in Chile. The first experiment finds that self-help peer groups are a powerful tool to increase savings (the number of deposits grows 3.5-fold and the average savings balance almost doubles). Conversely, a substantially higher interest rate has no effect on most participants. A second experiment tests an alternative delivery mechanism and shows that effects of a similar size can be achieved by holding people accountable through feedback text messages, without any meetings or peer pressure.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18417.

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Date of creation: Sep 2012
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Handle: RePEc:nbr:nberwo:18417

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References

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  1. Karlan, Dean S. & McConnell, Margaret & Mullainathan, Sendhil & Zinman, Jonathan, 2010. "Getting to the Top of Mind: How Reminders Increase Saving," CEPR Discussion Papers 7907, C.E.P.R. Discussion Papers.
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  21. Nava Ashraf & Dean Karlan & Wesley Yin, 2005. "Deposit Collectors," Working Papers 930, Economic Growth Center, Yale University.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. NEUDC 2012: Papers I liked
    by Dany Jaimovich - Bakary Baludin in Development Therapy on 2012-11-09 17:19:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Altmann, Steffen & Traxler, Christian, 2012. "Nudges at the Dentist," IZA Discussion Papers 6699, Institute for the Study of Labor (IZA).
  2. Annamaria Lusardi & Olivia S. Mitchell, 2013. "The Economic Importance of Financial Literacy: Theory and Evidence," NBER Working Papers 18952, National Bureau of Economic Research, Inc.
  3. Brigitte C. Madrian, 2012. "Matching Contributions and Savings Outcomes: A Behavioral Economics Perspective," NBER Working Papers 18220, National Bureau of Economic Research, Inc.
  4. Pascaline Dupas & Jonathan Robinson, 2011. "Why Don't the Poor Save More? Evidence from Health Savings Experiments," NBER Working Papers 17255, National Bureau of Economic Research, Inc.
  5. Lahno, Amrei M. & Serra-Garcia, Marta, 2012. "Peer Effects in Risk Taking," Discussion Papers in Economics 14309, University of Munich, Department of Economics.
  6. Jose Apesteguia & Patricia Funk and Nagore Iriberri, 2010. "Promoting Rule Compliance in Daily-Life: Evidence from a Randomized Field Experiment in the Public Libraries of Barcelona," Working Papers 492, Barcelona Graduate School of Economics.
  7. Melanie Morten & Dean Karlan & Jonathan Zinman, 2012. "A Personal Touch: Text Messaging for Loan Repayment," Working Papers 1011, Economic Growth Center, Yale University.
  8. Miller, Margaret & Reichelstein, Julia & Salas, Christian & Zia, Bilal, 2014. "Can you help someone become financially capable ? a meta-analysis of the literature," Policy Research Working Paper Series 6745, The World Bank.
  9. Pascaline Dupas & Sarah Green & Anthony Keats & Jonathan Robinson, 2014. "Challenges in Banking the Rural Poor: Evidence from Kenya's Western Province," NBER Chapters, in: African Successes: Modernization and Development National Bureau of Economic Research, Inc.
  10. Dean Karlan & Aishwarya Lakshmi Ratan & Jonathan Zinman, 2013. "Savings by and for the Poor: A Research Review and Agenda," Working Papers 1027, Economic Growth Center, Yale University.
  11. Ximena Cadena & Antoinette Schoar, 2011. "Remembering to Pay? Reminders vs. Financial Incentives for Loan Payments," NBER Working Papers 17020, National Bureau of Economic Research, Inc.
  12. Dean Karlan, Aishwarya Lakshmi Ratan, Jonathan Zinman, 2013. "Savings by and for the Poor: A Research Review and Agenda-Working Paper 346," Working Papers 346, Center for Global Development.

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