IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/18417.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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.

Suggested Citation

  • Felipe Kast & Stephan Meier & Dina Pomeranz, 2012. "Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device," NBER Working Papers 18417, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18417
    Note: DEV PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w18417.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Richard H. Thaler & Shlomo Benartzi, 2004. "Save More Tomorrow (TM): Using Behavioral Economics to Increase Employee Saving," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 164-187, February.
    2. Stefano DellaVigna & John A. List & Ulrike Malmendier, 2012. "Testing for Altruism and Social Pressure in Charitable Giving," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 1-56.
    3. Thaler, Richard H, 1990. "Saving, Fungibility, and Mental Accounts," Journal of Economic Perspectives, American Economic Association, vol. 4(1), pages 193-205, Winter.
    4. Alexandre Mas & Enrico Moretti, 2009. "Peers at Work," American Economic Review, American Economic Association, vol. 99(1), pages 112-145, March.
    5. Dan Ariely & Anat Bracha & Stephan Meier, 2009. "Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially," American Economic Review, American Economic Association, vol. 99(1), pages 544-555, March.
    6. Apesteguia, Jose & Funk, Patricia & Iriberri, Nagore, 2013. "Promoting rule compliance in daily-life: Evidence from a randomized field experiment in the public libraries of Barcelona," European Economic Review, Elsevier, vol. 64(C), pages 266-284.
    7. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
    8. Demirgüç-Kunt, A. & Beck, T.H.L. & Honohan, P., 2008. "Finance for all? : Policies and pitfalls in expanding access," Other publications TiSEM aec73d3a-d6eb-457f-9182-3, Tilburg University, School of Economics and Management.
    9. Stephan Meier & Charles Sprenger, 2010. "Present-Biased Preferences and Credit Card Borrowing," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 193-210, January.
    10. Dean Karlan & Sendhil Mullainathan & Margaret McConnell & Jonathan Zinman, 2010. "Getting to theTop of Mind: How Reminders Increase Saving," Working Papers id:2587, eSocialSciences.
    11. Victor Stango & Jonathan Zinman, 2014. "Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees," Review of Financial Studies, Society for Financial Studies, vol. 27(4), pages 990-1030.
    12. Uri Gneezy & Stephan Meier & Pedro Rey-Biel, 2011. "When and Why Incentives (Don't) Work to Modify Behavior," Journal of Economic Perspectives, American Economic Association, vol. 25(4), pages 191-210, Fall.
    13. Jens Ludwig & Jeffrey R. Kling & Sendhil Mullainathan, 2011. "Mechanism Experiments and Policy Evaluations," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 17-38, Summer.
    14. Lusardi, Annamaria & Mitchell, Olivia S., 2007. "Baby Boomer retirement security: The roles of planning, financial literacy, and housing wealth," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 205-224, January.
    15. Bandiera, Oriana & Ashraf, Nava & Jack, Kelsey, 2012. "No margin, no mission? A Field Experiment on Incentives for Pro-Social Tasks," CEPR Discussion Papers 8834, C.E.P.R. Discussion Papers.
    16. Yan Chen & F. Maxwell Harper & Joseph Konstan & Sherry Xin Li, 2010. "Social Comparisons and Contributions to Online Communities: A Field Experiment on MovieLens," American Economic Review, American Economic Association, vol. 100(4), pages 1358-1398, September.
    17. Gugerty, Mary Kay, 2007. "You Can't Save Alone: Commitment in Rotating Savings and Credit Associations in Kenya," Economic Development and Cultural Change, University of Chicago Press, vol. 55(2), pages 251-282, January.
    18. Brune, Lasse & Gine, Xavier & Goldberg, Jessica & Yang, Dean, 2011. "Commitments to save : a field experiment in rural Malawi," Policy Research Working Paper Series 5748, The World Bank.
    19. Michael Kremer & Dan Levy, 2008. "Peer Effects and Alcohol Use among College Students," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 189-206, Summer.
    20. DeanS. Karlan, 2007. "Social connections and group banking," Economic Journal, Royal Economic Society, vol. 117(517), pages 52-84, February.
    21. John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian & Katherine L. Milkman, 2015. "The Effect of Providing Peer Information on Retirement Savings Decisions," Journal of Finance, American Finance Association, vol. 70(3), pages 1161-1201, June.
    22. Esther Duflo & Emmanuel Saez, 2003. "The Role of Information and Social Interactions in Retirement Plan Decisions: Evidence from a Randomized Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 815-842.
    23. James Banks & Zoe Oldfield, 2007. "Understanding Pensions: Cognitive Function, Numerical Ability and Retirement Saving," Fiscal Studies, Institute for Fiscal Studies, vol. 28(2), pages 143-170, June.
    24. Leonardo Bursztyn & Florian Ederer & Bruno Ferman & Noam Yuchtman, 2012. "Understanding Peer Effects in Financial Decisions: Evidence from a Field Experiment," NBER Working Papers 18241, National Bureau of Economic Research, Inc.
    25. Gabriel D. Carroll & James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2009. "Optimal Defaults and Active Decisions," The Quarterly Journal of Economics, Oxford University Press, vol. 124(4), pages 1639-1674.
    26. Mary Kay Gugerty, 2007. "You Can't Save Alone: Commitment in Rotating Savings and Credit Associations in Kenya," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 251-282.
    27. Allcott, Hunt, 2011. "Social norms and energy conservation," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1082-1095, October.
    28. Eliana La Ferrara, 2003. "Kin Groups and Reciprocity: A Model of Credit Transactions in Ghana," American Economic Review, American Economic Association, vol. 93(5), pages 1730-1751, December.
    29. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2010. "Social Incentives in the Workplace," Review of Economic Studies, Oxford University Press, vol. 77(2), pages 417-458.
    30. James J. Choi & David Laibson & Brigitte C. Madrian, 2010. "Why Does the Law of One Price Fail? An Experiment on Index Mutual Funds," Review of Financial Studies, Society for Financial Studies, vol. 23(4), pages 1405-1432, April.
    31. Ashraf Nava & Karlan Dean & Yin Wesley, 2006. "Deposit Collectors," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-24, March.
    32. Pascaline Dupas & Jonathan Robinson, 2013. "Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 163-192, January.
    33. Harrison Hong & Jeffrey D. Kubik & Jeremy C. Stein, 2004. "Social Interaction and Stock-Market Participation," Journal of Finance, American Finance Association, vol. 59(1), pages 137-163, February.
    34. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-877, October.
    35. Jen Shang & Rachel Croson, 2009. "A Field Experiment in Charitable Contribution: The Impact of Social Information on the Voluntary Provision of Public Goods," Economic Journal, Royal Economic Society, vol. 119(540), pages 1422-1439, October.
    36. Pascaline Dupas & Jonathan Robinson, 2013. "Why Don't the Poor Save More? Evidence from Health Savings Experiments," American Economic Review, American Economic Association, vol. 103(4), pages 1138-1171, June.
    37. Duflo, Esther & Saez, Emmanuel, 2002. "Participation and investment decisions in a retirement plan: the influence of colleagues' choices," Journal of Public Economics, Elsevier, vol. 85(1), pages 121-148, July.
    38. Schelling, Thomas C, 1984. "Self-Command in Practice, in Policy, and in a Theory of Rational Choice," American Economic Review, American Economic Association, vol. 74(2), pages 1-11, May.
    39. Uri Gneezy & Pedro Rey-Biel, "undated". "On the Relative Efficiency of Performance Pay and Social Incentives," Working Papers 585, Barcelona School of Economics.
    40. Bruno S. Frey & Stephan Meier, 2004. "Social Comparisons and Pro-social Behavior: Testing "Conditional Cooperation" in a Field Experiment," American Economic Review, American Economic Association, vol. 94(5), pages 1717-1722, December.
    41. Kristopher Gerardi & Lorenz Goette & Stephan Meier, 2010. "Financial literacy and subprime mortgage delinquency: evidence from a survey matched to administrative data," FRB Atlanta Working Paper 2010-10, Federal Reserve Bank of Atlanta.
    42. Adi Brender & Allan Drazen, 2009. "Do Leaders Affect Government Spending Priorities?," NBER Working Papers 15368, National Bureau of Economic Research, Inc.
    43. Battaglini, Marco & Benabou, Roland & Tirole, Jean, 2005. "Self-control in peer groups," Journal of Economic Theory, Elsevier, vol. 123(2), pages 105-134, August.
    44. Bruce Sacerdote, 2001. "Peer Effects with Random Assignment: Results for Dartmouth Roommates," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 681-704.
    45. Alexander M. Gelber, 2011. "How Do 401(k)s Affect Saving? Evidence from Changes in 401(k) Eligibility," American Economic Journal: Economic Policy, American Economic Association, vol. 3(4), pages 103-122, November.
    46. 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.
    47. Milkman, Katherine L. & Beshears, John Leonard & Choi, James J. & Laibson, David I. & Madrian, Brigitte, 2011. "Using Implementation Intentions Prompts to Enhance Influenza Vaccination Rates," Scholarly Articles 8057976, Harvard Kennedy School of Government.
    48. Gharad Bryan & Dean Karlan & Scott Nelson, 2010. "Commitment Devices," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 671-698, September.
    49. Ian Ayres & Sophie Raseman & Alice Shih, 2009. "Evidence from Two Large Field Experiments that Peer Comparison Feedback Can Reduce Residential Energy Usage," NBER Working Papers 15386, National Bureau of Economic Research, Inc.
    50. Allcott, Hunt, 2011. "Social norms and energy conservation," Journal of Public Economics, Elsevier, vol. 95(9), pages 1082-1095.
    51. repec:feb:framed:0087 is not listed on IDEAS
    52. Bruno Frey & Stephan Meier, 2004. "In a field experiment," Natural Field Experiments 00243, The Field Experiments Website.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kast, Felipe & Meier, Stephan & Pomeranz, Dina, 2018. "Saving more in groups: Field experimental evidence from Chile," Journal of Development Economics, Elsevier, vol. 133(C), pages 275-294.
    2. Leonardo Bursztyn & Florian Ederer & Bruno Ferman & Noam Yuchtman, 2012. "Understanding Peer Effects in Financial Decisions: Evidence from a Field Experiment," NBER Working Papers 18241, National Bureau of Economic Research, Inc.
    3. Leonardo Bursztyn & Florian Ederer & Bruno Ferman & Noam Yuchtman, 2014. "Understanding Mechanisms Underlying Peer Effects: Evidence From a Field Experiment on Financial Decisions," Econometrica, Econometric Society, vol. 82(4), pages 1273-1301, July.
    4. Bonan, Jacopo & Battiston, Pietro & Bleck, Jaimie & LeMay-Boucher, Philippe & Pareglio, Stefano & Sarr, Bassirou & Tavoni, Massimo, 2021. "Social interaction and technology adoption: Experimental evidence from improved cookstoves in Mali," World Development, Elsevier, vol. 144(C).
    5. Christian Thoeni & Simon Gaechter, 2011. "Peer Effects and Social Preferences in Voluntary Cooperation," Discussion Papers 2011-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    6. Thöni, Christian & Gächter, Simon, 2015. "Peer effects and social preferences in voluntary cooperation: A theoretical and experimental analysis," Journal of Economic Psychology, Elsevier, vol. 48(C), pages 72-88.
    7. Paul Dolan & Robert Metcalfe, 2013. "Neighbors, Knowledge, and Nuggets: Two Natural Field Experiments on the Role of Incentives on Energy Conservation," Natural Field Experiments 00404, The Field Experiments Website.
    8. Dur, Robert & Fleming, Dimitry & van Garderen, Marten & van Lent, Max, 2021. "A social norm nudge to save more: A field experiment at a retail bank," Journal of Public Economics, Elsevier, vol. 200(C).
    9. Anat Bracha & Stephan Meier, 2014. "Nudging credit scores in the field: the effect of text reminders on creditworthiness in the United States," Working Papers 15-2, Federal Reserve Bank of Boston.
    10. Holladay, Scott & LaRiviere, Jacob & Novgorodsky, David & Price, Michael, 2019. "Prices versus nudges: What matters for search versus purchase of energy investments?," Journal of Public Economics, Elsevier, vol. 172(C), pages 151-173.
    11. Zafar, Basit, 2011. "An experimental investigation of why individuals conform," European Economic Review, Elsevier, vol. 55(6), pages 774-798, August.
    12. Crawford, Ian & Harris, Donna, 2018. "Social interactions and the influence of “extremists”," Journal of Economic Behavior & Organization, Elsevier, vol. 153(C), pages 238-266.
    13. Yeomans, Mike & Herberich, David, 2014. "An experimental test of the effect of negative social norms on energy-efficient investments," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 187-197.
    14. Christian Thoeni & Simon Gaechter, 2011. "Peer Effects and Social Preferences in Voluntary Cooperation," Discussion Papers 2011-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    15. Christoph Feldhaus & Tassilo Sobotta & Peter Werner, 2019. "Norm Uncertainty and Voluntary Payments in the Field," Management Science, INFORMS, vol. 65(4), pages 1855-1866, April.
    16. Lorenz Götte & Egon Tripodi, 2022. "Social Recognition: Experimental Evidence from Blood Donors," CESifo Working Paper Series 9719, CESifo.
    17. Linek, Maximilian & Traxler, Christian, 2021. "Framing and social information nudges at Wikipedia," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 1269-1279.
    18. Pinar Yildirim & Yanhao Wei & Christophe Bulte & Joy Lu, 2020. "Social network design for inducing effort," Quantitative Marketing and Economics (QME), Springer, vol. 18(4), pages 381-417, December.
    19. Andrea La Nauze, 2023. "Motivation Crowding in Peer Effects: The Effect of Solar Subsidies on Green Power Purchases," The Review of Economics and Statistics, MIT Press, vol. 105(6), pages 1465-1480, November.
    20. d'Adda, Giovanna & Dufwenberg, Martin & Passarelli, Francesco & Tabellini, Guido, 2020. "Social norms with private values: Theory and experiments," Games and Economic Behavior, Elsevier, vol. 124(C), pages 288-304.

    More about this item

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • Z18 - Other Special Topics - - Cultural Economics - - - Public Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:18417. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.