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Consumption and debt response to increased savings

Last registered on March 24, 2015
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Pre-Trial

Trial Information

General Information

Title
Consumption and debt response to increased savings
RCT ID
AEARCTR-0000607
Initial registration date
March 24, 2015

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
March 24, 2015, 8:49 PM EDT

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

Last updated
March 24, 2015, 9:03 PM EDT

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

Locations

Country
Turkey
Region
Country
United States of America
Region

Primary Investigator

Name
Deniz Aydin
Affiliation
Washington University in St. Louis
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
John Beshears
PI Affiliation
Harvard Business School
Contact Investigator

Additional Trial Information

Status
In development
Start date
2015-02-15
End date
2016-03-01
Keywords
Finance & Microfinance
Additional Keywords
consumption, savings, IRA, debt, household finance, field experiment
JEL code(s)
C93, D12, D14, D91, E21, G21, O16
Secondary IDs
Abstract
What is the consumption, debt and balance sheet response to increased savings? The budget constraint requires that every dollar saved should decrease consumption (or increase debt). Do individuals cut on groceries or human capital investments in response to increased savings? Do minimum savings requirements such as IRAs decrease liquidity and induce expensive borrowing through credit cards? This project revisits such foundational questions on the consumption/savings interplay in the retirement savings context. We propose a research design that would allow to answer these questions directly via a field experiment in Turkey. Through a large local financial institution, I randomly nudge a few thousand individuals via a phone solicitation to increase their savings through a retirement savings account, and track their consumption, debt and balance sheet responses.
External Link(s)

Registration Citation

Citation
Aydin, Deniz and John Beshears. 2015. "Consumption and debt response to increased savings." AEA RCT Registry. March 24. https://doi.org/10.1257/rct.607-4.0
Former Citation
Aydin, Deniz and John Beshears. 2015. "Consumption and debt response to increased savings." AEA RCT Registry. March 24. https://www.socialscienceregistry.org/trials/607/history/3836
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
We work jointly with a financial institution in Turkey that offers a multitude of financial accounts, including savings accounts, credit cards and IRAs. A unique feature of the environment is that more than 40% of household expenditures, including IRA contributions, are made with credit cards. In order to increase observability, we focus on the subset of customers that make their IRA contributions with their credit cards. The financial institution periodically phone calls existing customers to nudge them to increase their savings; we exclude a control group of 12000 over the course of four months to receive an intervention.
Intervention Start Date
2015-03-01
Intervention End Date
2015-07-01

Primary Outcomes

Primary Outcomes (end points)
The main outcome variable of interest is the consumption response in different sectors. Secondarily, we are also interested in the change in credit card debt and other balance sheet effects, such as savings in non-IRA accounts.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The financial institution serves 400,000 IRA contracts. About 10,000-15,000 of these contracts are nudged via a phone call to increase their savings by the company. About 10,000-15,000 of these contracts are nudged via a phone call to increase their savings by the company. Experiment participants are chosen to be the sole owner/payer of their IRA contracts. We then oversample three groups of customers: 1) those that have wage information 2) those that participate in an ongoing parallel credit card experiment 3) those that do not have a credit card from another bank. Finally, we exclude 3000 individuals from the individuals to be called.
Experimental Design Details
Randomization Method
Randomization will be done in a computer, in the SQL server that hosts the participant information.
Randomization Unit
Randomization is done one the basis of individual.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
24000
Sample size: planned number of observations
24000
Sample size (or number of clusters) by treatment arms
12000 individuals control, 12000 treatment; (~36000 treatment undersampled)
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Stanford
IRB Approval Date
2014-04-28
IRB Approval Number
29432
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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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