The impact of a “carry-around” soft commitment device on savings and temptation spending: Evidence from a field experiment in Indian slums

Last registered on September 10, 2024

Pre-Trial

Trial Information

General Information

Title
The impact of a “carry-around” soft commitment device on savings and temptation spending: Evidence from a field experiment in Indian slums
RCT ID
AEARCTR-0003682
Initial registration date
December 18, 2018

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
December 21, 2018, 10:25 PM EST

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

Last updated
September 10, 2024, 7:29 AM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Region

Primary Investigator

Affiliation
Technical University of Munich

Other Primary Investigator(s)

PI Affiliation
University of Goettingen
PI Affiliation
PI Affiliation
TUM

Additional Trial Information

Status
Completed
Start date
2018-12-01
End date
2019-12-31
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We study the impact of a portable "soft" commitment device on the financial behavior of low-income slum dwellers in urban Pune, India. The portable device may add value to existing commitment designs by activating its binding appeal precisely at the point in time when spending decisions are made. 1650 individuals will be randomly allocated to receive either a zip purse and a lock box (treatment arm) or a lock box only (control arm). Both groups are asked to formulate a savings goal and commit to a step-by-step individualized savings plan. We will estimate the causal impact of receiving the portable device on total savings amounts and temptation spending. Further, we will compare study arms with regards to their borrowing activity, expenditure levels, resilience to economic shocks, financial self-efficacy, and female empowerment. Findings from this study can enhance the current understanding of how commitment devices may help alleviate behavioral biases and temptations.

Additional study component: Trust game
To measure spousal trust and trustworthiness, a behavioral lab-in-the-field experiment was conducted with a randomly selected subsample of 360 respondents and their spouses in additional home visits, after the household had been visited for the endline survey.
External Link(s)

Registration Citation

Citation
Steinert, Janina et al. 2024. "The impact of a “carry-around” soft commitment device on savings and temptation spending: Evidence from a field experiment in Indian slums." AEA RCT Registry. September 10. https://doi.org/10.1257/rct.3682-3.2
Former Citation
Steinert, Janina et al. 2024. "The impact of a “carry-around” soft commitment device on savings and temptation spending: Evidence from a field experiment in Indian slums." AEA RCT Registry. September 10. https://www.socialscienceregistry.org/trials/3682/history/234620
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Experimental Details

Interventions

Intervention(s)
Treatment:
The proposed intervention, named “Aaj bachat kara, udya khush raha” (Marathi for “Save today, be happy tomorrow”), consists of a portable savings device (zip purse) that is provided in addition to a stationary savings box. It is thereby hypothesized that the carry-around savings device fulfils both a reminder and earmarking function that may invoke feelings of guilt and failure if money is spent on temptation goods.

The stationary device is a lockbox. Keys are distributed to the participant and his/her partner residing in the same housheold. The lock box can thus be opened at any time. Money thus retains its liquidity and can be accessed in urgent cases or emergencies. The intervention can therefore be conceived of as a “soft nudge” rather than a “hard” and fully coercive commitment.

Savings devices are distributed to participants during home visits. In these visits, participants are also encouraged to formulate a savings goal and commit to an individualized savings plan that outlines specific steps on how to reach their savings goal.

(Active) Control:
The control group receives only the stationary and not the portable savings device. Similar to the treatment group, the device is delivered in home visits and participants are asked to formulate both a savings goal and detailed savings plan.
Intervention (Hidden)
Intervention Start Date
2019-03-10
Intervention End Date
2019-04-30

Primary Outcomes

Primary Outcomes (end points)
1. Total Savings
2. Temptation Spending
Primary Outcomes (explanation)
1. Total Savings:
Includes savings held in the lockbox and also savings held elsewhere (e.g., bank account, savings group, post office). Enumerators will be instructed to physically count the money stored in the lockbox.
2. Temptation Spending
We introduce a new measure of temptation spending by capturing past as well as desired future consumption of nine selected food non-food items (e.g., alcohol, tobacco, gambling,...). Temptation goods are said to differ from “essential” goods in that they provide utility when consumed, but not in anticipation of their consumption. Based on this standard definition, we classify each of the selected items only as a ‘temptation good’ if the reported amount for past expenses exceeds the desired future amount. For each respondent, these divergences will then be added up into a total amount of past-month temptation expenditures. This approach allows us to define a unique set of temptation goods for each individual respondent, without reliance on a priori, researcher-defined temptation categories.
We further include a self-rated temptation index based on the following three items:
-In the past month, I spent money on things that I didn’t really need.
-In the past month, I bought something and later regret that I did.
-In the past month, I found it difficult to really control on how I spend my money

Secondary Outcomes

Secondary Outcomes (end points)
1. Self-Efficacy
2. Total Debt
3. Resilience to Economic Shocks Female Empowerment
4. Past-month Household Expenditures
5. Female Empowerment
Secondary Outcomes (explanation)
1. Self-Efficacy
Items for the psychological concept of self-efficacy were drawn from the \emph{Internality, Powerful Others and Chance (IPC)} scale (Levenson, 1981) as well as from financial self-efficacy scales used previously in Steinert et al. (2018) and Lown (2011). Individual items will be aggregated into an index based on PCA.

2. Total Debts
In addition to total savings amounts, we will also capture outstanding debts in the past month.

3.Resilience to Emergenies:
Further to this, our survey will measure respondents’ capacity to cope with potential health or other emergencies. This will be determined based on whether participants have managed to cover the costs for potential medical treatment and medicine in the past month. We will further capture whether respondents have experienced some sort of income shock in the past six months and if so, how difficult it was for them to cope with this shock.

4. Past-month Household Expenditures
To assess the potential downstream impact of saving, we will also consider a more distal indicator of household welfare, namely past-month food and non-food expenditures.

5. Female Empowerment
Previous financial inclusion literature has routinely assessed program impacts on female empowerment. In line with this, we will measure female empowerment (for the female sample only) based on a PCA-weighted index composed of seven individual items.

Experimental Design

Experimental Design
1650 slum dwellers from the city of Pune, India, will be enrolled in the trial. 825 participants will be randomly allocated to the treatment group and 825 participants to the control group. Randomization will be stratified by participant sex, income, and present bias. Eligibility criteria are a) being 18 years and older, b) having some income (employment or other) at least once per week or on a monthly basis, and c) holding at least some decision making power over how money is spent. The study aims for a roughly equal share of female and male participants.

***
Additional study component: Trust game

Design and procedures:
Spousal trust and trustworthiness were quantified by a simplified binary trust game, in which spouses were randomly selected to act as the first and second mover, respectively (see Figure 1 below). The first mover was asked to decide between two payout options, namely (A) relying on the spouse’s decision to determine the final payout and accepting a potential loss in case the spouse will choose to default (proxy for trust), or (B) defining the final payout without relying on the spouse’s decision and thus a priori accepting a lower final payout (proxy for mistrust). If the first mover opted for decision (A), the second mover determined the final payout by choosing (A) whether to cooperate (proxy for trustworthiness) and receive equal payouts or (B) whether to default and thereby maximize the individual payout (proxy for untrustworthiness).
Since the trust game was a sequential game and was only played once, each spouse only made one choice (single-role game). Thus, for every spouse, the game yields one decision, either in terms of trust or trustworthiness, depending on whether the spouse was randomly selected to be the first or second mover, respectively. Choices were kept private such that both spouses made their decisions without knowledge about the other movers’ choice.

Payouts were selected to reflect gender-specific preferences, namely embroidered handkerchiefs for female subjects and plain handkerchiefs for male subjects. The payout amounts varied in the number of handkerchiefs to be received in the different scenarios determined through spouses’ choices and were chosen as such to maintain an incentive to maximize the own payout, i.e. by ensuring a sufficient gain in utility of receiving an additional handkerchief. The selection of gender-specific payouts was crucial in order to adequately measure individual trust and trustworthiness between spouses. Interchangeable payouts would be valued equally by both spouses and might thus motivate individuals to maximize payouts differently, e.g., according to a joint household payout. Moreover, gender-specific (as opposed to interchangeable) payoffs may reduce potential reciprocal or reputational effects of conducting a trust game between non-anonymous, cohabiting players.
The team of enumerators that administered this study component was deliberately different from the one that conducted the main survey data collection. To internalize the rules and procedures of the trust game and to discuss potential difficulties during its conduction in the field, the team underwent an extensive three-day training. For the implementation of the trust game during home visits, we assigned two enumerators per household instead of one in order to ensure a clean implementation. This assured the isolation of spouses from each other during their decision-making processes and choice determination in the trust game as well as a detailed presentation of the choices and payouts.

Constructed variables:
The data from the trust game was used to create two types of variables, which will be used in the empirical analysis to detect heterogeneity in treatment effects:
1. Individual choices in trust game:
This refers to the wife’s and the husband’s individual decisions to cooperate/deflect in the trust game (regardless of what the respective other mover chose). The corresponding variables indicate spouses’ trust and trustworthiness (each coded as 1 if a person cooperated, and as 0 if a person deflected).
2. Alignment of choices in trust game:
We also account for whether the decision of one mover in the trust game was aligned with the other mover’s decision. We created two variables to quantify the alignment of choices in the trust game: First, a binary variable, coded as 1 if choices were aligned (i.e., both cooperated or both did not cooperate) and as 0 if they were misaligned. Second, a categorical variable that also specifies the type of alignment, i.e., that distinguishes between positive alignment (both cooperated), negative alignment (both did not cooperate) and no alignment.
Experimental Design Details
Randomization Method
Randomization to treatment and control group will be done on a 1:1 ratio, implemented in Stata, stratified by participant sex, baseline savings, and present biased time preferences.
Randomization Unit
Individual Randomization
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
NA
Sample size: planned number of observations
1650
Sample size (or number of clusters) by treatment arms
825 participants treatment, 825 participants control.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
For desired power of 0.80 with two-tailed p<0.007 (for seven hypothesis tests) and a minimum detectable effect size of 0.37, the target sample size for the trial is 1500 individuals. We oversampled by 10% to account for attrition.
IRB

Institutional Review Boards (IRBs)

IRB Name
Ethics Committee of the University of Goettingen
IRB Approval Date
2018-12-13
IRB Approval Number
EK 10.-35/2018
Analysis Plan

Analysis Plan Documents

Pre-Analysis+Plan+Pune+RCT_JS.pdf

MD5: 66f4ecb4d2f3529a1db469e40a447b19

SHA1: 1e22286f0391a761716fd2276e134f8b689db396

Uploaded At: November 18, 2019

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials