The Disparate Effect of Nudges on Minority Groups

Maya Haran Rosen and Orly Sade ()

No 2021.21, Bank of Israel Working Papers from Bank of Israel

Abstract: We use an experiment in Israel to compare the effect of short text messages sent via mobile phones on the actions of minority groups versus the general population regarding the “Savings for Every Child” program. Financial institutions and regulators are increasingly using digital text messages to raise awareness or encourage participation in programs and initiatives. We study the effect of these messages on individual behavior, and the size of this effect for different segments of the population. Our unique setting and proprietary data reveal that the text message had an overall positive effect, but a significantly smaller effect on minority groups. By combining our proprietary data with a dedicated survey, we provide additional insights on potential barriers (low digital literacy, low financial literacy, and low trust) that contribute to the differential effect. The research points to the importance of using specific measures that focus on minorities in order to raise the success of government initiatives.

Pages: 64 pages
Date: 2021-12
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-pay and nep-soc
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https://boiwebrepec.azurefd.net/RePEc/boi/wpaper/WP_2021.21.pdf First version, 2021 (application/pdf)

Related works:
Journal Article: The Disparate Effect of Nudges on Minority Groups (2022)
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