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Saving more in groups: field experimental evidence from Chile


Kast, Felipe; Meier, Stephan; Pomeranz, Dina (2016). Saving more in groups: field experimental evidence from Chile. HBS Working Paper Series 12-060.

Abstract

We test the impact of a peer group savings program on precautionary savings, through two randomized field experiments among 2,687 microcredit clients. The first experiment finds that the Peer Group Treatment, which combines public goal setting, monitoring in the group, and non-financial rewards, increases savings in a new savings account significantly. The number of deposits grows 3.7-fold, and the average savings balance almost doubles. In contrast, a more classical measure, a substantially increased interest rate, has no effect for most participants and raises the savings balance only for the very top of the distribution. A second experiment, conducted a year later, tests an alternative delivery mechanism and shows that effects of similar size can be achieved through feedback text messages, without meetings, rewards, or peer pressure.

Abstract

We test the impact of a peer group savings program on precautionary savings, through two randomized field experiments among 2,687 microcredit clients. The first experiment finds that the Peer Group Treatment, which combines public goal setting, monitoring in the group, and non-financial rewards, increases savings in a new savings account significantly. The number of deposits grows 3.7-fold, and the average savings balance almost doubles. In contrast, a more classical measure, a substantially increased interest rate, has no effect for most participants and raises the savings balance only for the very top of the distribution. A second experiment, conducted a year later, tests an alternative delivery mechanism and shows that effects of similar size can be achieved through feedback text messages, without meetings, rewards, or peer pressure.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:D03, D14, D91, O16
Uncontrolled Keywords:Saving, decision making, interest rates, planning, performance effectiveness, economics, entrepreneurship, growth and development, social enterprise, global Range, Chile
Language:English
Date:April 2016
Deposited On:07 Feb 2017 15:52
Last Modified:29 Aug 2017 23:42
Series Name:HBS Working Paper Series
Number of Pages:63
Additional Information:Harvard Business School Working Paper Series
Official URL:http://www.hbs.edu/faculty/Publication%20Files/12-060_8c16f5e7-6fa1-48cc-858d-bba5f12c28ba.pdf
Related URLs:http://www.hbs.edu/faculty/Pages/item.aspx?num=42103

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