Savings Incentives

Savings promotion is a key aspect of social protection, as it increases the ability of lower income families to guard themselves against adverse economic shock; consequently, policies to improve financial inclusion providing... [ view full abstract ]

Savings promotion is a key aspect of social protection, as it increases the ability of lower income families to guard themselves against adverse economic shock; consequently, policies to improve financial inclusion providing formal savings devices have grown worldwide. Despite the above mentioned, evidence shows that the sole access to saving devices is not necessarily linked to an increase of savings. Individuals may have behavioral problems that limit their savings. For example, limited attention and time inconsistency have proven to be important, with SMS savings reminders and financial instruments with default savings being effective in increasing the amounts of savings. Using a randomized control trial, we evaluate both types of devices in vulnerable populations of Chile. We also test the effectiveness of providing savings rules of thumb, as a mechanism to help individuals make good decisions with limited knowledge. In this version of the study, we report the treatment effects on savings and debts using administrative data. No treatment had a positive effect in savings balance 9 months after the intervention.