Commitment Savings and CCTs in the Dominican Republic

Researchers are conducting a randomized evaluation among 4,160 randomly selected ProSoli households to understand how savings mechanisms affect their financial behavior.

The heads of selected beneficiary households will first receive invitations to a savings training session, offered by the partner bank Asociación Dominicana para el Desarrollo de la Mujer (ADOPEM). The three- or four-hour session will cover the importance of saving, the advantages of formal savings over informal savings, and tips to manage household finances s. A representative from ADOPEM will then offer participants one of two savings accounts, assigned at random to each session:

1.) Soft commitment and incentives account: This account is labeled with the client’s chosen savings goals, primarily education expenses or housing improvements, although any savings goal is possible. Accountholders decide how much they will deposit monthly. Those who adhere to their deposit schedule will be entered into a lottery for cash, equal to double the amount of the committed savings amount. . These accountholders will also be automatically approved for emergency loans of up to 50 percent of their account balance.

2.) Regular savings account: This is a normal savings account, which is neither labeled for a savings goal nor incentivized.

2015-05-25

2016-03-05

One year after the initial product offer and trainings occur, researchers will examine take-up, account usage, savings balances, and whether savings committed to a specific label were ultimately used for those purposes.

The study also focuses on the characteristics of beneficiaries that correlate with greater take-up and usage of those accounts. To measure this, we have various indicators in our baseline and follow-up surveys that gather information the socioeconomic status of the beneficiary household, employment and income, and previous knowledge or use of formal financial services. We also measure risk aversion, discount rates, entrepreneurial attitudes, grit, and other psychological metrics. Finally, we also made audio recordings of surveyed beneficiaries responding to open-ended questions about their perception and attitudes towards savings, and we will parse these responses using natural language processing methods. All these data will be incorporated into a larger prediction model, to see if they can be used to anticipate take up and usage of the savings accounts offered by ADOPEM. If successful, these results can demonstrate new ways tot target and improve the efficiency of similar savings programs.

From a random sample of eligible ProSoli beneficiaries in Azua's main municipality, Azua de Compostela, half were randomly selected to receive the treatment product (commitment savings account), and the other half were selected to be the control group (receiving an ordinary savings account). Both groups attend the savings account workshops, which have no difference between the two except the different account offerings at the end of each session.

Eligible ProSoli beneficiaries are those that are considered in moderate poverty as per the country's poverty index. This index is calculated by using several indicators: housing (materials, crowding, type), basic services (water, waste, sanitation, electricity, natural gas, household appliances, human capital (education of all household members, school attendance, literacy), income-generating capacity (employment, family members under 5, gender). Type II households fall at or below the poverty line.

The randomization and selection of treatment and control was done using government administrative data, with Stata.

The randomization unit used is the nucleo, the administrative grouping unit of beneficiaries created by ProSoli to organize all other program activities and field staff. Nucleos have about 35 beneficiaries each, on average.

Yes

200

4200

2100 commitment savings account (treatment)
2100 ordinary account