Getting to the Top of Mind: How Reminders Increase Saving

Karlan, Dean; McConnell, Margaret; Mullainathan, Sendhil; Zinman, Jonathan

doi:10.2139/ssrn.1636817

Cited by 197 publications

(292 citation statements)

References 44 publications

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“…Our findings also demonstrate that salience shocks can shift behaviour in different directions, depending on the context. While Karlan et al (2012) find that deliberate and targeted reminders raise contributions to goal-specific savings accounts in Bolivia, Peru and the Philippines, we find that exposure to a module of questions about retirement income needs lowered overall saving in the Netherlands. We also find quite different patterns of effect heterogeneity.…”

contrasting

confidence: 74%

“…Limited attention means that individuals tend to overlook some of the consequences of their decisions (DellaVigna, 2009). If those unnoticed consequences materialise in the future, as do the benefits of saving today, this results in biases that are similar to those induced by limited self-control (Karlan et al, 2012). However, in contrast to self-control problems, limited attention suggests that behaviour might be corrected by focusing individuals' attention on the aspects they are missing.…”

mentioning

confidence: 99%

“…For example, inDuflo et al (2006),Karlan et al (2012), and in many studies of individual retirement accounts, the outcome variables are contributions to one account; seeCrossley et al (2012) for a discussion.© 2016 The Authors. The Economic Journal published by John Wiley & Sons Ltd on behalf of Royal Economic Society.…”

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confidence: 99%

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Can Survey Participation Alter Household Saving Behaviour?

Crossley

Bresser

Delaney

et al. 2017

The Economic Journal

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We document an effect of survey participation on household saving. Identification comes from random assignment to modules within a population-representative Internet panel. The saving measure is based on linked administrative wealth data. Households that responded to a detailed questionnaire on needs in retirement reduced their non-housing saving rate by 3.5 percentage points, on a base of 1.5%. The survey may have acted as a salience shock, possibly with respect to reduced housing costs in retirement. Our findings present an important challenge to survey designers. They also add to the evidence of limited attention in household financial decision making.Much empirical research in economics analyses data from surveys of individuals and households. The development of panel surveys has allowed researchers to assess and account for heterogeneity and dynamics in economic behaviour. However, repeated data collection from the same individuals or households brings a risk of 'survey effects' -the possibility that questioning individuals about their actions or attitudes in a particular domain can alter their later behaviour. Finding significant survey effects in important areas of economic research would require a rethinking of data collection strategies. More positively, finding such effects might also provide insight into the cognitive processes underlying broader economic behaviour.In this article, we test for survey effects in a central domain of economic research: household saving behaviour. In particular, we test whether being asked questions about retirement income needs leads to changes in household saving behaviour. Recent work in behavioural finance suggests possible mechanisms for survey effects on saving behaviour. Limited attention means that individuals tend to overlook some of the consequences of their decisions (DellaVigna, 2009). If those unnoticed consequences materialise in the future, as do the benefits of saving today, this results in biases that are similar to those induced by limited self-control (Karlan et al., 2012). However, in contrast to self-control problems, limited attention suggests that behaviour might be corrected by focusing individuals' attention on the aspects they are missing. For example, recent literature suggests that sending out mailings can induce desired

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confidence: 74%

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Can Survey Participation Alter Household Saving Behaviour?

Crossley

Bresser

Delaney

et al. 2017

The Economic Journal

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“…19 See, for example, Bryan, Karlan, and Nelson (2010) and DellaVigna (2009). 20 See Ashraf, Karlan, and Yin (2006), as well as Karlan, McConnell, Mullainathan, and Zinman (2010). say, designer drugs or iPads) is plainly an empirical matter.…”

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confidence: 99%

Poverty and Self-Control

2015

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We argue that poverty can perpetuate itself by undermining the capacity for self‐control. In line with a distinguished psychological literature, we consider modes of self‐control that involve the self‐imposed use of contingent punishments and rewards. We study settings in which consumers with quasi‐hyperbolic preferences confront an otherwise standard intertemporal allocation problem with credit constraints. Our main result demonstrates that low initial assets can limit self‐control, trapping people in poverty, while individuals with high initial assets can accumulate indefinitely. Thus, even temporary policies that initiate accumulation among the poor may be effective. We examine implications concerning the effect of access to credit on saving, the demand for commitment devices, the design of financial accounts to promote accumulation, and the variation of the marginal propensity to consume across income from different sources. We also explore the nature of optimal self‐control, demonstrating that it has a simple and behaviorally plausible structure that is immune to self‐renegotiation.

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“…For discussions on the distinctive contributions to savings mobilization made possible by micro savings and electronic payments systems, see e.g. Brune et al (2013); Karlan et al (2014); Karlan et al (2016). 23.…”

Section: Different Financial Services Different Developmental Experimentioning

confidence: 99%

Better than Cash, but Beware the Costs: Electronic Payments Systems and Financial Inclusion in Developing Economies

Santos¹,

Kvangraven²

2017

Development and Change

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This article considers current proposals for using electronic payments systems to promote financial inclusion — that is, to widen the availability of financial and monetary services in developing countries. While such systems can generate significant savings in the operation of monetary systems, payment services markets are typically uncompetitive and require regulatory and broader state interventions to ensure those savings are widely distributed. The use of those systems to broaden the reach of for‐profit lenders raises a number of concerns, as a growing literature has documented how microcredit initiatives in developing countries have resulted primarily in expansions in consumption credit to households, often under predatory terms. The authors advance two original arguments in this connection. First, the perverse results of many microcredit initiatives reflect the underdevelopment of the areas concerned: without broader development strategies, potentially transformative productive projects are rare and unprofitable to finance. In contrast, widespread unmet consumption needs ensure consumption credit offers lenders a profitable alternative business orientation. Second, and in light of this, electronic payments platforms can contribute to economic development by enabling the establishment of well‐regulated or public systems of electronic ‘narrow banks’ restricted from lending, but capable of widening access to affordable payments, savings and insurance services.

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Getting to the Top of Mind: How Reminders Increase Saving

Cited by 197 publications

References 44 publications

Can Survey Participation Alter Household Saving Behaviour?

Can Survey Participation Alter Household Saving Behaviour?

Poverty and Self-Control

Better than Cash, but Beware the Costs: Electronic Payments Systems and Financial Inclusion in Developing Economies

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