Attention incentives in saving for retirement

We evaluate an experimental intervention conducted by our research partner, a Colombian pension fund. Clients receive phone calls from the organization that encourages them to increase voluntary savings under different experimental conditions, varying economic incentives to save and the availability of personalized reminders to save.

2022-05-09

2022-05-10

1. (short term) whether the client meets the incentivized saving threshold of 5000 pesos within 8 weeks
2. (short term) whether the client chooses to receive reminders to save

3. (short term) total amount saved within 8 weeks
4. (longer term) whether the client reaches within a year the saving goal that gives them disability and life insurance

The experiment features 13 treatments:
Control
$2500 matched-saving incentive, without reminder
$2500 matched-saving incentive, with reminder
$2500 matched-saving incentive, with option to receive costly (price=$1000) reminder
$2500 matched-saving incentive, with option to receive costly (price=$2000) reminder
$5000 matched-saving incentive, without reminder
$5000 matched-saving incentive, with reminder
$5000 matched-saving incentive, with option to receive costly (price=$1000) reminder
$5000 matched-saving incentive, with option to receive costly (price=$2000) reminder
$10000 matched-saving incentive, without reminder
$10000 matched-saving incentive, with reminder
$10000 matched-saving incentive, with option to receive costly (price=$1000) reminder
$10000 matched-saving incentive, with option to receive costly (price=$2000) reminder

All monetary values are in Colombian Pesos.

In the treatment groups (groups 2-13), subjects are required to save $5,000 in order to qualify for the match. All subjects in the thirteen experimental conditions were contacted by a call center that informs them about the existing incentives for saving (described below). In the 12 treatment conditions, these groups are further informed about the corresponding matching offer.

If subjects are in group 3, 7, or 11, they receive an SMS reminder about the matching offer 7 weeks after they have been contacted and one week prior to the expiration of the offer..

If subjects are in group 4, 5, 8, 9, 12, or 13, they only receive the reminder if they choose to receive it when they are first contacted by the call center. Choosing the reminder comes at a cost: subjects pay a price p={$1,000, $2,000} that is subtracted from their match. Subjects in groups 2, 6, and 10 are not offered a reminder.

In all experimental conditions, subjects receive a 20% match on their contributions, their savings are adjusted for inflation, and they are eligible for disability and life insurance conditional on their savings behavior. If they (1) save $10,000 at least 10 times by December 2022 or (2) save at least $30,000 one time, then they get disability and life insurance. Both insurances last for the following year (2023).

We will use this experiment to identify the effect of matching and of reminders on savings behavior. We will use variation in the price of reminders and incentives to save to estimate a model of attention allocation. In particular, we are interested whether subjects’ willingness to pay for a reminder is equal to the true returns of being reminded, which we would expect under rational inattention. Alternatively, subjects may under- or overestimate their probability of forgetting to save, such that willingness to pay for the reminder is below or above the true returns of being attentive. To obtain an estimate of willingness to pay, we will estimate a demand curve for the reminder, using the experimentally-induced price variation.

randomization done in office by a computer

individual level

No

n.a.

300,000 randomized to receive calls. From a small pilot, we expect a 13% response rate. Therefore the planned study sample is 40,000.

4000 in control, and 3000 in each treatment condition.