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Factors affecting completion of a matched savings program: Impacts of time preference, discount rate, and financial hardship

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  • Manturuk, Kim
  • Dorrance, Jessica
  • Riley, Sarah

Abstract

There is a general consensus among researchers and policymakers that matched savings programs can significantly increase the propensity to save among low-income households. This study offers a unique contribution to the field by testing whether principals and theories from behavioral economics affect the decisions that participants make in these savings programs. Using a sample of people participating in the $aveNYC program, a matched savings program for very low-income households, we test whether information failure, time preference, and financial hardship affected people's ability to complete the program and receive the match money. We find that future orientation does not significantly impact program completion, but both information failure and financial hardship increase the hazard of early account closure. Although the pool of participants who did not receive the match was small, both information failure and financial hardship had large impacts on the risk of withdrawing the account before receiving a match. We discuss how these findings can inform program design and suggest future research.

Suggested Citation

  • Manturuk, Kim & Dorrance, Jessica & Riley, Sarah, 2012. "Factors affecting completion of a matched savings program: Impacts of time preference, discount rate, and financial hardship," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(6), pages 836-842.
    • Handle: RePEc:eee:soceco:v:41:y:2012:i:6:p:836-842
    DOI: 10.1016/j.socec.2012.08.006
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    References listed on IDEAS

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    Cited by:

    1. Shavit, Tal & Lahav, Eyal & Shahrabani, Shosh, 2014. "What affects the decision to take an active part in social justice protests? The impacts of confidence in society, time preference and interest in politics," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 52(C), pages 52-63.
    2. Tonsing, Kareen N. & Ghoh, Corinne, 2019. "Savings attitude and behavior in children participating in a matched savings program in Singapore," Children and Youth Services Review, Elsevier, vol. 98(C), pages 17-23.

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    More about this item

    Keywords

    Time preference; Discount rate; Savings; Tax refund; Survival analysis;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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