The Persistent Power of Behavioral Change: Long-Run Impacts of Temporary Savings Subsidies for the Poor
I use a field experiment in rural Kenya to study how temporary incentives to save impact long-run economic outcomes. Study participants randomly selected to receive large temporary interest rates on an individual bank account had significantly more income and assets 2.5 years after the interest rates expired. These changes are much larger than the short-run impacts on experimental bank account use and almost entirely driven by growth in entrepreneurship. Temporary interest rates directed to joint bank accounts had no detectable long-run impacts on entrepreneurship or income, but increased investment in household public goods and spousal consensus over finances.
I thank Erica Field, Dean Karlan, Erzo F.P. Luttmer, Rohini Pande, Joshua Schwartzstein, Jonathan Zinman, and seminar participants at UC Berkeley, Boston University, Brown University, IFPRI, Notre Dame, Tufts University, UC San Diego, and the University of Missouri for numerous useful comments. This project would not have been possible without the tireless assistance, hard work, and commitment of many employees of Family Bank. I am particularly indebted to Victor Keriri Mwangi, Steve Mararo, and Michael Aswani Were. I also thank James Vancel, Noreen Makana, and Thomas Ginn for superb field management and the IPA field officers for their excellent assistance with the data collection. I gratefully acknowledge the financial support of the Russell Sage Foundation, the George and Obie Shultz Fund, MIT's Jameel Poverty Action Lab, the National Science Foundation's Graduate Research Fellowship, and the Yale Savings and Payments Research Fund at Innovations for Poverty Action, sponsored by a grant from the Bill & Melinda Gates Foundation. Research activities were approved by Institutional Review Boards at MIT, the Kenya Medical Research Institute, Innovations for Poverty Action Kenya, and Dartmouth College. This RCT was registered in the American Economic Association Registry for randomized control trials under trial number AEARCTR-0001358. All errors are my own. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Simone Schaner, 2018. "The Persistent Power of Behavioral Change: Long-Run Impacts of Temporary Savings Subsidies for the Poor," American Economic Journal: Applied Economics, vol 10(3), pages 67-100. citation courtesy of