TY - JOUR
T1 - Tying odysseus to the mast
T2 - Evidence from a commitment savings product in the Philippines
AU - Ashraf, Nava
AU - Karlan, Dean
AU - Yin, Wesley
N1 - Funding Information:
* We thank Chona Echavez for collaborating on the field work, the Green Bank of Caraga for cooperation throughout this experiment, John Owens and the USAID/Philippines Microenterprise Access to Banking Services Program team for helping to get the project started, Nathalie Gons, Tomoko Harigaya, Karen Lyons and Lauren Smith for excellent research and field assistance, and three anonymous referees and the editors. We thank seminar participants at Stanford University, University of California–Berkeley, Cornell University, Williams College, Princeton University, Yale University, BREAD, University of Wisconsin–Madison, Harvard University, Social Science Research Council, London School of Economics, Northwestern University, Columbia University, Oxford University, Association of Public Policy and Management annual conference, and the CEEL Workshop on Dynamic Choice and Experimental Economics, and many advisors, colleagues and mentors for valuable comments throughout this project. We thank the National Science Foundation (SGER SES-0313877), Russell Sage Foundation, and the Social Science Research Council for funding. We thank Sununtar Set-boonsarng, Vo Van Cuong, and Xianbin Yao at the Asian Development Bank and the PCFC for providing funding for related work. All views, opinions, and errors are our own.
PY - 2006/5
Y1 - 2006/5
N2 - 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 trade-offs, and hence potentially have a preference for commitment, were indeed significantly more likely to open the commitment savings account. After twelve months, average savings balances increased by 81 percentage points for those clients assigned to the treatment group relative to those assigned 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.
AB - 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 trade-offs, and hence potentially have a preference for commitment, were indeed significantly more likely to open the commitment savings account. After twelve months, average savings balances increased by 81 percentage points for those clients assigned to the treatment group relative to those assigned 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.
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U2 - 10.1162/qjec.2006.121.2.635
DO - 10.1162/qjec.2006.121.2.635
M3 - Article
AN - SCOPUS:33645333256
SN - 0033-5533
VL - 121
SP - 635
EP - 672
JO - Quarterly Journal of Economics
JF - Quarterly Journal of Economics
IS - 2
ER -