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

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  • Pascaline Dupas
  • Jonathan Robinson

Abstract

Using data from a field experiment in Kenya, we document that providing individuals with simple informal savings technologies can substantially increase investment in preventative health and reduce vulnerability to health shocks. Simply providing a safe place to keep money was sufficient to increase health savings, through a mental accounting effect. Adding an earmarking feature was only helpful when funds were put towards emergencies; earmarking for preventative health reduced savings on average, because the liquidity cost of tying up money was too great. Providing social pressure and credit through a ROSCA-based savings scheme had very large effects.

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  • 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.
  • Handle: RePEc:nbr:nberwo:17255
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    More about this item

    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
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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