Saving more in groups: Field experimental evidence from Chile

By Felipe Kast, Stephan Meier, Dina Pomeranz. Journal of Development Economics, 2018

143 citations recorded by the source corpus.

We test the impact of a peer group program on savings in a sample of microcredit clients. We conduct two randomized trials among these 2687 microcredit clients. The first finds that a Savings Group Treatment, which combines public goal setting, monitoring in the group and non-financial rewards, increases savings in a new savings account significantly. The number of deposits grows 3.7-fold and the average balance almost doubles. In contrast, a more classical measure, a substantially increased interest rate, has no effect for most participants and raises the savings balance only for the very top of the distribution. A second experiment, conducted a year later, tests an alternative delivery mechanism and shows that effects of similar size can be achieved through feedback text messages, without meetings, rewards, or peer pressure. Given that participants are borrowing at 90% APR, we discuss how and when saving more could be harmful or beneficial.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/ab258db082c01b8302808ffa221b40ae9e917c61

Citations in the corpus

• Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan (2018, unknown): “This stands in contrast to other settings, such as commitment and group savings (Karlan et al. 2016b; Kast et al. 2016), where subjects understand their preferred course of action but need nudges to behave consistently with those preferences.”