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Field
Abstract
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Before
I designed and implemented a Randomized Controlled Trial to study whether relatively simple modifications to how a commitment savings product was framed and labeled could affect savings accumulations and other outcomes of low-income individuals in newly formed Village Savings and Loan Associations (VSLAs) in Colombia. Motivated by hypotheses from behavioral economics the experiment tests hypotheses that behavioral responses should vary depending on whether subjects are led to label and create ‘mental savings accounts’ in private or public ways. Individuals in the private-labeling treatment groups were led to label their savings as earmarked for a particular purpose and to state savings accumulation targets, information which was shared only privately with a member of the research team. Individuals in the public-labeling treatment groups received the same intervention but were then asked to publicly reveal and announce their chosen goals to other members of their savings group. The average treatment effects of the public-labeling intervention are very strong and significant. Savings accumulations increased by an average of 35% and savings goals were 21.5% more likely to be reached in comparison to those untreated. Further explorations strongly suggests evidence of differentiated behavioral responses of individuals in the private-labeling treatment group: private commitment to a savings goal is more effective for individuals who, after random assignment but prior to the intervention, had been measured to be less constrained by economic circumstances and institutional barriers. The analysis and interpretation of results was enriched by mixed methods for data collection: households’ survey data, administrative records and qualitative data from focus groups discussions.
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After
I designed and implemented a Randomized Controlled Trial to study whether simple modifications to the framing and labeling of a commitment savings product affected savings accumulations and other outcomes of low-income individuals in newly-formed Village Savings and Loan Associations in Colombia. Motivated by insights from behavioral economics, the study tests if behavioral responses vary depending on whether subjects are led to label and create ‘mental savings accounts’ in private or public ways. Individuals in the private-labeling treatment groups were led to label their savings as earmarked for a particular purpose and to state savings accumulation targets, information which was shared only privately with a member of the research team. Individuals in the public-labeling treatment groups received the same intervention but were then asked to reveal publicly and announce their chosen goals to other members of their savings group. The average treatment effects of the public-labeling intervention are very strong and significant. Savings accumulations increased by an average of 35% and savings goals were 8.5% more likely to be reached in comparison to the untreated group. Further results strongly suggest evidence of differentiated behavioral responses of individuals in the private-labeling treatment group: private commitment to a savings goal is more effective for individuals who, after random assignment but prior to the intervention, had been measured to be less constrained by economic circumstances and institutional barriers.
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