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Commitment or Concealment? Impacts and Use of a Portable Saving Device: Evidence from a Field Experiment in Urban India

Janina Isabel Steinert (), Rucha Vasumati Satish, Felix Stips and Sebastian Vollmer
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Janina Isabel Steinert: Technical University of Munich, TUM School of Governance; Department of Social Policy and Intervention, University of Oxford
Rucha Vasumati Satish: Chair of Development Economics, University of Goettingen
Felix Stips: Centre for Evaluation (CEval)
Sebastian Vollmer: Chair of Development Economics, University of Goettingen

Munich Papers in Political Economy from TUM School of Governance at the Technical University of Munich

Abstract: We study the impact of a portable "soft" commitment device on the financial behavior of low-income slum dwellers in Maharashtra, India. 1525 individuals were randomly allocated to receiving either a zip purse and a lockbox (treatment arm) or a lockbox only (control arm). Based on self-reported measures and hand counts of money held in the distributed saving devices, we document an 81% increase in total savings in the treatment group. We do not find significant reductions in temptation spending, thus suggesting that increases in savings were not primarily realized through improvements in self-control. Instead, we suggest that reduced sharing obligations are driving the effect. In additional analyses, we document a 35% decrease in past-month transfers of cash to other household members. Hence, our findings suggest that saving can be more effectively promoted by alleviating access-related rather than behavior-related constraints, and particularly by giving women access to a saving device of their own.

Keywords: Saving; Temptation Spending; Commitment Device; RCT (search for similar items in EconPapers)
JEL-codes: D14 D15 D91 I31 O12 O16 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2020-09
New Economics Papers: this item is included in nep-exp, nep-fdg and nep-mfd
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