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Better Strategies for Saving More Evidence from Three Interventions in Chile

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Listed:
  • Abhijit Banerjee
  • Claudia Martínez A
  • Esteban Puentes

Abstract

Individual behavioral biases can affect savings behavior. We conduct an experiment to evaluate different strategies to increase savings. We compare an automatic savings plan (or default rule), monthly reminders, and a rule-of-thumb savings package that appeals to careful spending. We find that rule-of-thumb and default rules can increase savings for one year after the intervention. In contrast, reminders can reduce account balances and debt levels. The increase in savings under the default rule is produced by a (mechanical) increase in deposits, but savings is later decreased by an increase in withdrawals.

Suggested Citation

  • Abhijit Banerjee & Claudia Martínez A & Esteban Puentes, 2023. "Better Strategies for Saving More Evidence from Three Interventions in Chile," Working Papers wp545, University of Chile, Department of Economics.
    • Handle: RePEc:udc:wpaper:wp545
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    File URL: https://econ.uchile.cl/uploads/publicacion/a8c00e78295d0becf608dfb78cc231a0f042ea98.pdf
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    References listed on IDEAS

    as
    1. Pascaline Dupas & Dean Karlan & Jonathan Robinson & Diego Ubfal, 2018. "Banking the Unbanked? Evidence from Three Countries," American Economic Journal: Applied Economics, American Economic Association, vol. 10(2), pages 257-297, April.
    2. Girum Abebe & Biruk Tekle & Yukichi Mano, 2018. "Changing Saving and Investment Behaviour: The Impact of Financial Literacy Training and Reminders on Micro-businesses," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 27(5), pages 587-611.
    3. 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.
    4. Felipe Kast & Dina Pomeranz, 2013. "Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile," Harvard Business School Working Papers 14-001, Harvard Business School, revised Jun 2014.
    5. Pascaline Dupas, Dean Karlan, Jonathan Robinson and Diego Ubfal, 2016. "Banking the Unbanked: Evidence from Three Countries - Working Paper 440," Working Papers 440, Center for Global Development.
    6. 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.
    7. Pierre Bachas & Paul Gertler & Sean Higgins & Enrique Seira, 2021. "How Debit Cards Enable the Poor to Save More," Journal of Finance, American Finance Association, vol. 76(4), pages 1913-1957, August.
    8. Felipe Dizon & Erick Gong & Kelly Jones, 2020. "The Effect of Promoting Savings on Informal Risk Sharing: Experimental Evidence from Vulnerable Women in Kenya," Journal of Human Resources, University of Wisconsin Press, vol. 55(3), pages 963-998.
    9. Pascaline Dupas & Dean Karlan & Jonathan Robinson & Diego Ubfal, 2018. "Banking the Unbanked? Evidence from Three Countries," American Economic Journal: Applied Economics, American Economic Association, vol. 10(2), pages 257-297, April.
    10. Suresh de Mel & Craig McIntosh & Christopher Woodruff, 2013. "Deposit Collecting: Unbundling the Role of Frequency, Salience, and Habit Formation in Generating Savings," American Economic Review, American Economic Association, vol. 103(3), pages 387-392, May.
    Full references (including those not matched with items on IDEAS)

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