BREAD Working Paper No. 083, October 2004
Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines
Nava Ashraf, Dean Karlan, Wesley Yin
We designed a commitment savings product for a Philippine bank and implemented it using a randomized control methodology.? The savings product was intended for individuals who want to commit now to restrict access to their savings, and who were sophisticated enough to engage in such a mechanism.? We conducted a baseline survey on 1777 existing or former clients of a bank.? One month later, we offered the commitment product to a randomly chosen subset of 710 clients; 202 (28.4 percent) accepted the offer and opened the account.? In the baseline survey, we asked hypothetical time discounting questions.? Women who exhibited a lower discount rate for future relative to current tradeoffs, and hence potentially have a preference for commitment, were indeed more likely to open the commitment savings account.? After six (twelve) months, average savings balances at the partnering bank increased by 46 (80) percent for the treatment group relative to the control group.? Those who opened the account increased savings by 192 (337) percent relative to the control group. We conclude that the savings response represents a lasting change in savings, and not merely a short-term response to a new product.
Keywords: savings, intra-household bargaining, commitment, program evaluation, field experiment
JEL classification codes: C93, D91, D13, O12, O16, H43
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