Better Strategies for Saving More: Evidence from Four Impact Evaluations in Chile
Access to savings devices does not necessarily increase savings, but individual behavioral biases can affect savings behavior. Using randomized control trials, we evaluate different strategies to increase savings.
In the first experiment, we compare three interventions: an automatic savings plan (ASP), monthly SMS reminders of savings goals, and a rule-of-thumb savings package. The rule-of-thumb package and ASP temporarily increase savings balances for 6 to 12 months, after which the effect disappears. Reminders have a negative effect on transactional account balances, no effect on savings account balances, and decrease retail debt. These effects on savings depend on the time horizon of the goal.
In the second experiment, we randomly offer recipients of a conditional cash transfer program the opportunity to receive their subsidies as a direct deposit. We find an increase in the transactional account balance over two years after the opportunity to change, but not afterward.
We conclude that rules-of-thumb and default rules can have positive short-term effects on savings, while SMS reminders can have unexpected negative effects on account balances and debt levels.