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

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 sealed piggy bank. After opening the seal once, it is destroyed and loses its function as a physical barrier to access the savings. However, by allowing for this flexibility, money 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.

2019-01-01

2019-02-15

1. Total Savings
2. Temptation Spending

1. Total Savings:
Includes savings held in stationary savings box and also savings held elsewhere (e.g., bank account, savings group, post office)
2. Temptation Spending
We use a new measure which captures past consumption and desired future consumption on 13 food items and 10 non-food items. ‘Temptation goods’ differ from normal goods in that they provide utility when consumed, but not in anticipation of their consumption. Using this definition in our survey allows us to define a unique set of temptation goods for each individual.
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

1. Female Empowerment
2. Self-Efficacy and Locus of Control
3. Resilience to Health Shock
4. Total debts

1. Female Empowerment:
Aggregated index (using principal component analysis) based on the following individual items:
-Boys should be fed first and given more food compared to girls.
-A husband should be more educated than his wife.
-Daughters should have a similar right to inherited property as sons.
-It would be a good idea to elect a woman as the President of India again.
-Do you get in trouble for leaving the house without informing your husband or another household member? (asked to women only)
-Do you get in trouble for making unescorted outings such as visiting your parents, friends, going to the market? (asked to women only)

2. Self-Efficacy and Locus of Control:
Aggregated index (using principal component analysis) based on the following individual items:
-When I make plans, I am almost certain to make them work
-When I get what I want, it’s usually because I worked hard for it
-My life is controlled by other powerful people
-I am confident that I will not run out of money before the next payday
-I am confident that I can plan carefully in advance how to use my money during each week

1600 slum dwellers from the city of Pune, India, will be enrolled in the trial. 800 participants will be randomly allocated to the treatment group and 800 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.

Randomization to treatment and control group will be done on a 1:1 ratio, implemented in Stata, stratified by participant sex, income level, and present biased time preferences.

Individual Randomization

No

NA

1600

800 participants treatment, 800 participants control.

For desired power of 0.80 with two-tailed p<0.05 and a minimum detectable effect size of 0.14, the target sample size for the trial is 1600 individuals.