Do prize-linked incentives promote positive financial behavior? Evidence from a debt reduction intervention

Jeremy Burke

Journal of Public Economics, 2021, vol. 204, issue C

Abstract: We conduct the first field experiment examining whether prize-linked incentives can be effective in promoting debt reduction by randomizing access among 6,907 borrowers in a debt management plan. We find strong take-up of the program and that takers were timelier with repayment and paid off more debt. However, average treatment effect estimates for on-time payments, programmatic dropout, and debt levels (46.7 dollars, 95% CI = [−$132, $225], control mean = $11,558) are all precise zeros. Our results suggest that despite strong interest and positive correlations, prize-linked incentives may not modify debt repayment behavior and may simply attract individuals who are ex-ante likely to repay.

Keywords: Prize-linked incentives; Debt; Household Finance (search for similar items in EconPapers)
JEL-codes: D12 G23 G41 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:204:y:2021:i:c:s0047272721001705

DOI: 10.1016/j.jpubeco.2021.104534

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