Consumption and debt response to increased savings
Last registered on March 30, 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
Last updated
March 30, 2015 6:11 PM EDT
Location(s)
Country
Turkey
Region
Country
United States of America
Region
Primary Investigator
Name
Deniz Aydin
Affiliation
Stanford
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Other Primary Investigator(s)
PI Name
John Beshears
PI Affiliation
Harvard Business School
Contact Investigator
Additional Trial Information
Status
On going
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
This paper studies 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? We revisit such foundational questions on the consumption/savings interplay in the retirement savings context, and propose a research design that would allow to answer these questions directly via a field experiment in a European financial institution. Through a large local financial institution, we randomly exclude a few thousand individuals from 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 30. https://www.socialscienceregistry.org/trials/607/history/3927
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Experimental Details
Interventions
Intervention(s)
We work jointly with a financial institution in Europe 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 12,000 over the course of four months from receiving a phone call.
Intervention Start Date
2015-04-01
Intervention End Date
2015-07-01
Primary Outcomes
Primary Outcomes (end points)
The main outcome variable of interest is the consumption response in 18 sectors, i.e. retail, groceries, insurance etc. We often group these into durables, nondurables and services. Secondarily, we are also interested in the change in credit card debt and other balance sheet effects, such as durable accumulation and 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. Every month, 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 owners/payers of their IRA contracts. We then oversample three groups of customers: 1) those with wage information, 2) those that participate in an ongoing parallel credit card experiment, and 3) those that do not have a credit card from another bank. Finally, we determine 3000 individuals by a coin flip, and remove them 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
Harvard
IRB Approval Date
2015-02-25
IRB Approval Number
15-0305
IRB Name
Stanford
IRB Approval Date
2014-04-28
IRB Approval Number
29432
Analysis Plan
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers