Estimating the Elasticity of Intertemporal Substitution

Last registered on February 24, 2026

Pre-Trial

Trial Information

General Information

Title
Estimating the Elasticity of Intertemporal Substitution
RCT ID
AEARCTR-0017968
Initial registration date
February 22, 2026

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
February 24, 2026, 6:41 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Affiliation
University of Luxembourg

Other Primary Investigator(s)

Additional Trial Information

Status
In development
Start date
2026-03-09
End date
2027-03-09
Secondary IDs
ESSEC Research Ethics Committee ref. 2025-063
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This study explores how people change their spending and saving habits when interest rates rise. We conduct an experiment with users of a digital investment platform, splitting them into two groups. One group (the "treatment" group) receives a higher interest rate on their savings, while the other (the "control" group) stays at their standard rate. By comparing these groups, we measure the Elasticity of Intertemporal Substitution (EIS): how much people are willing to delay spending today in favour of saving for tomorrow. This research helps explain how modern consumers react to changes in the interest rates, providing real-world evidence on how central bank policy shapes our daily financial decisions.
External Link(s)

Registration Citation

Citation
Fraschini, Martina. 2026. "Estimating the Elasticity of Intertemporal Substitution." AEA RCT Registry. February 24. https://doi.org/10.1257/rct.17968-1.0
Sponsors & Partners

Sponsors

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Experimental Details

Interventions

Intervention(s)
We divide the participants into two groups. One group (the "treatment" group) receives a higher interest rate on their savings, while the other (the "control" group) stays at their standard rate. We then observe if the increase in the interest rate of the treatment group affects their consumption behaviour by comparing their spending with those of the control group.
Intervention Start Date
2026-04-06
Intervention End Date
2026-10-05

Primary Outcomes

Primary Outcomes (end points)
Elasticity of intertemporal substitution (EIS)
Primary Outcomes (explanation)
The elasticity of intertemporal substitution (EIS) is measured as the change in consumption growth given a change in the interest rate. It can be inferred from the estimated beta in the diff-in-diff regression.

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The study begins by recruiting participants from a digital investment platform and inviting them to take part in a research project on financial habits. Among those who volunteer, we use stratified randomisation to ensure the groups are balanced by age and geographic origin. The treatment group then receives a fixed increase in the interest rate on their savings, while the control group’s rate remains unchanged.

To evaluate the impact of the change in interest rates, we analyse daily transaction data from both internal and linked external accounts. Specifically, we track consumption growth by monitoring total expenditures and "nondurable" spending (i.e., everyday costs like groceries and leisure). By comparing these spending patterns before and after the intervention, we can measure whether the higher interest rate cause people to decelerate their spending in favour of saving, or if their consumption habits remain unchanged.
Experimental Design Details
Not available
Randomization Method
The study will utilise stratified randomisation to account for key demographic factors (state of origin and age). The randomisation will be done in office by a computer among willing participants.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
500 individuals
Sample size: planned number of observations
500 individuals
Sample size (or number of clusters) by treatment arms
500 individuals
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
ESSEC Research Ethics Committee
IRB Approval Date
2025-11-12
IRB Approval Number
2025-063