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

Listed author(s):
  • Felipe Kast
  • Stephan Meier
  • Dina Pomeranz

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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File URL: http://www.nber.org/papers/w18417.pdf
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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
Handle: RePEc:nbr:nberwo:18417
Note: DEV PE
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