We study the following four treatments, all randomly assigned at the individual level: (1) video-based financial literacy education, (2) paying participants for performance on an exit test (“pay for performance”), (3) financial counseling, and (4) financial goal setting. We discuss each of these interventions in more detail below.
* Financial Education
Participants in this treatment were invited to attend a video-based financial literacy training program. The financial education videos include the following five topics: budgeting, savings, loans, insurance, and a final summary video. To avoid bias from Hawthorne-type effects, the control group was assigned to watch health education videos. These health training videos cover information unrelated to financial literacy, specifically: cleanliness and hygiene; midwife, maternal and child health; condoms, AIDS and syphilis; and night-blindness.
* Pay for Performance
In this treatment, monetary incentives were provided to participants based on their performance on a follow up survey. The survey was administered to the respondent’s household 2 to 3 weeks after the final video training session. It consisted of both financial and health literacy test questions, all drawn directly from the video training. Respondents receive Rs. 10 for each question that they answer correctly, but we vary which questions individuals are compensated for. Specifically, half the participants, selected individually at random, and independent of their financial education treatment status, are paid for correct answers to questions related to the videos they watched (i.e. health training participants receive compensation for health test questions, and similarly for financial literacy training participants). The other half are paid for correct answers to questions that are not covered in their video training (i.e. financial literacy training participants get paid for health or general knowledge test questions, and vice versa).
* Goal Setting
Individuals in this treatment received a household visit and are first asked about whether they currently use, or plan to use, financial services and financial planning tools. Next, they are asked to set a target date for several financial planning goals (i.e. opening a savings account, increasing savings, reducing expenditure, purchasing insurance). These target dates are then marked on a calendar provided to respondents at no cost.
Those in this group received an offer of financial counseling, independent of their goal setting treatment status. Specifically, financial counselors visited the counseling treatment group in their home to provide individualized financial counseling services. The financial counselors assisted participants on several issues—including but not limited to preparing a budget, opening a bank account, paying off or re-financing loans, purchasing an insurance policy—depending on their needs. Financial counselors were trained rigorously by our partner research organization in India, the Center for Microfinance, prior to visiting respondents.