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Time-Inconsistency and Saving: Experimental Evidence from Low-Income Tax Filers
Last registered on June 08, 2015


Trial Information
General Information
Time-Inconsistency and Saving: Experimental Evidence from Low-Income Tax Filers
Initial registration date
June 08, 2015
Last updated
June 08, 2015 2:17 PM EDT
Primary Investigator
University of Chicago
Other Primary Investigator(s)
PI Affiliation
UC Berkekey
Additional Trial Information
Start date
End date
Secondary IDs
We conduct a field experiment designed to test theories of time-inconsistency, namely a β-δ model of present bias. The experiment takes place in the context of a saving decision made by low-income tax filers who can deposit their income tax refund into an illiquid account. We find qualitative evidence consistent with present-biased preferences. The tradeoff between an earlier payment or a later one is much more skewed toward taking the early payment when the decision is made on the spot than when the decision is made in advance. We estimate a β and δ of 0.34 and 1.08 over an 8-month horizon, respectively, which translates into an annual discount rate of 164%.
External Link(s)
Registration Citation
Jones, Damon and Aprajit Mahajan. 2015. "Time-Inconsistency and Saving: Experimental Evidence from Low-Income Tax Filers." AEA RCT Registry. June 08. https://doi.org/10.1257/rct.730-1.0.
Former Citation
Jones, Damon, Damon Jones and Aprajit Mahajan. 2015. "Time-Inconsistency and Saving: Experimental Evidence from Low-Income Tax Filers." AEA RCT Registry. June 08. http://www.socialscienceregistry.org/trials/730/history/4397.
Experimental Details
Our intervention takes place in the context of the non-profit tax preparation industry, where low- and moderate-income tax filers receive free tax preparation assistance.19 These non-profits — referred to as Volunteer Income Tax Association (VITA) organizations — typically offer additional services to their customers, including enrollment assistance for public benefits and financial counseling. Our sampling frame, while not representative of the US population, is of direct interest to policymakers. There are various policy initiatives aimed at encouraging low-income tax filers to save24 and our intervention is well suited to examine issues surrounding the take-up such a program.

We offer a “soft-commitment” option that incentivizes participants to follow through with their initial commitment, but also allows revisions to the final saving plan. Nonetheless, our experiment identifies time inconsistency by making use of the same key variation. That is, we compare the relative responsiveness to an incentive received earlier in time (e.g. Febru- ary) to one received later in time (e.g. October) for individuals making a decision in advance (e.g. December) or on the spot (e.g. February). The intervention has six experimental arms. In particular, each participant belongs to either
the non-commitment or commitment group — the nomenclature is explained below. Within each of these groups, there are three arms. In the non-commitment group, there is a control arm, an early incentive treatment arm and a late incentive treatment arm. Within the commitment group, there is likewise a control arm, an immediate incentive treatment arm and a delayed incentive treatment arm.

Intervention Start Date
Intervention End Date
Primary Outcomes
Primary Outcomes (end points)
Soft-Commitments to save, and saving decisions.
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
2.3.1 Non-Commitment Group
Tax filers in the non-commitment group make an on-the-spot savings decision at the tax site (e.g. in February), in response to variation in incentives paid either immediately (e.g. in February) or at a delayed time (e.g. in October). We use the outcomes in this group to inform us about the discount between the present and a future period. This group was contacted in December 2010. First, they received a notice in the mail, from the Financial Clinic, informing them that we would be calling them to explain a savings opportunity. Importantly, the mailing included information briefly summarizing the key, treatment group-specific, incentives.28 We then followed up the initial mailing with phone outreach to enroll the tax filer in the study. During the call, survey data on demographic characteristics and financial behavior were collected, and the participant was also asked to consider a matched savings account: the SaveUp Account. Participants were informed that if they return to The Financial Clinic tax preparation site to file their taxes, they would have the opportunity to open the SaveUp Account. In order to obtain the match, the tax filer must keep her savings amount in an illiquid account for 8 months (that is until October 2011). In return for allocating at least $300 to this account, the tax filer would receive a 50% match for each dollar saved between $300 and $1,050.29 Participants who only received this information comprise the non-commitment control arm
(group 1). The incentives for this control arm are represented graphically in Figure A.2. Within the set of non-commitment arms, there are two treatment arms who are additionally offered either an “immediate” incentive of $50 (group 2), given at the time of filing taxes, or a “delayed” incen- tive of $50 received after the 8 month saving period (group 3), in return for saving. A graphical representation of the incentives for members in these two treatment arms is provided in Figures A.3 and A.4.30
When participants in these three arms arrived to file their tax returns during the following tax season — February through April — they were presented with the opportunity to open a SaveUp account, featuring the savings incentives described above. The Financial Clinic is able to open the savings account with money from the income tax refund, via a direct deposit option on the income tax return. If an account is opened, the funds cannot be withdrawn for 8 months, at which point all savings matches are credited to the account. Members of treatment arm 2 who open an account receive their “immediate” incentive when making the initial deposit (see Figure A.3), while members of treatment arm 3 receive the “delayed” incentive 8 months after opening the account (see Figure A.4). Additional survey data, similar to that collected over the phone, was collected at the tax site.
Concretely, a member of the non-commitment control group had the opportunity to receive up to $375 in saving incentives if they chose to save $1,050. A member of the non-commitment treatment groups could have received up to $425 in saving incentives — which includes an extra $50 incentive over the control arm for saving.
2.3.2 Commitment Group
Participants in the commitment group made two decisions. Their first, soft-commitment decision was made prior to the tax season (e.g. December) in response to incentives paid earlier in the future (e.g. February) or later in the future (e.g. October). We use this first set of decisions to learn about the discount between two future payments, one further in the future than the other. Commitment group members also made a final savings decision at the tax site. This group was similarly contacted during the December preceding the tax filing season with a mail notice followed by phone outreach. In the mailing and over the phone they were provided with the relevant information for their experimental arms.31 Members of the commitment group were given surveys and informed of a saving opportunity, the SaveUpFront Account, in a similar fashion to members of the non-commitment groups.
In contrast to members of the non-commitment group, commitment group members were asked in December to make a soft-commitment regarding a savings account. Importantly, they either had the option of soft-committing to save or soft-committing to not save. The SaveUpFront account is similar to SaveUp Account, with a minimum deposit of $300, and a 50% match on every additional dollar deposited up until $950.32 The commitment was “soft” in that the ultimate savings deci- sion could deviate from the commitment. However, the soft-commitment still mattered for future incentives. If the tax filer softly committed to saving, the savings account would include an addi- tional $100 in savings incentives conditional on saving at least $300. Alternatively, if the tax filer soft-committed to not saving, she still had the option to save at the tax site, but now would receive a $75 payment in October should she not have saved. Thus, the commitment reinforced decisions in either direction, and therefore can be distinguished from “cheap talk.” Participants who only received this treatment comprised the commitment control arm (group 4). The incentives for this arm are illustrated in Figure A.5.
The remaining members of the two commitment treatment arms were offered an additional incentive for soft-committing to save. For soft-committing to save, the individual received a $50 incentive — either an “early” incentive, given at the time of filing taxes (group 5), or a “late” one received 8 months after the tax season (group 6). Importantly, the incentive was kept regardless of the final savings outcome — a key difference from the incentives for the non-commitment group. As will be explained below in Section 5, linking this incentive to the commitment decision, but keeping it independent of the final saving decision is key for separately identifying the discount parameters in a quasi-hyperbolic discounting model. The incentives for the two commitment treatment arms are illustrated in Figures A.6 and A.7.
At the time of tax preparation, members of the commitment group were reminded of their prior soft-commitment. They were also reminded of the features of the SaveUpFront Account, which depended on the previous, soft-commitment decision as demonstrated in Figures A.5–A.7. They then could make a final savings decision, which, importantly, could differ from their soft- commitment. There was, however, a penalty for deviating, i.e. the forgone commitment reward. The SaveUPFront Accounts were similarly funded via direct deposit from the income tax refund and had a similar maturity horizon of 8 months. Additional survey data was likewise collected from members of the commitment treatment groups when taxes were filed.
A member of the commitment control arm had the opportunity to receive up to $425 in saving and commitment incentives — $100 for following through on a soft-commitment to save and $325 for saving the maximum of $950. A member of the commitment treatment arms could receive up to $475 in incentives — which includes an extra $50 over the control arm just for having soft-committed to saving.
Experimental Design Details
Randomization Method
Randomization done in office by computer.
Randomization Unit
Individual level
Was the treatment clustered?
Experiment Characteristics
Sample size: planned number of clusters
Sample size: planned number of observations
Sample size (or number of clusters) by treatment arms
137 in T1, 139 in T2, 140 in T3, 137 in T4, 140 in T5, 140 in T6
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
N/A. We are not estimating a treatment effect, but rather, estimating discount factors.
IRB Name
Stanford University
IRB Approval Date
IRB Approval Number
Post Trial Information
Study Withdrawal
Is the intervention completed?
Is data collection complete?
Data Publication
Data Publication
Is public data available?
Program Files
Program Files
Reports, Papers & Other Materials
Relevant Paper(s)