Pontificia Universidad Católica de Chile
Catedral 1009, oficina 705
Institutional Affiliation: Harvard University
NBER Working Papers and Publications
|June 2014||Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile|
with Dina Pomeranz: w20239
Poverty is often characterized not only by low and unstable income, but also by heavy debt burdens. We find that reducing barriers to saving through access to free savings accounts decreases participants' short-term debt by about 20%. In addition, participants who experience an economic shock have less need to reduce consumption, and subjective well-being improves significantly. Precautionary savings and credit therefore act as substitutes in providing self-insurance, and participants prefer borrowing less when a free formal savings account is available. Take-up patterns suggest that requests by others for participants to share their resources may be a key obstacle to saving.
|September 2012||Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device|
with Stephan Meier, Dina Pomeranz: w18417
We test the effectiveness of self-help peer groups as a commitment device for precautionary savings, through two randomized field experiments among 2,687 microentrepreneurs in Chile. The first experiment finds that self-help peer groups are a powerful tool to increase savings (the number of deposits grows 3.5-fold and the average savings balance almost doubles). Conversely, a substantially higher interest rate has no effect on most participants. A second experiment tests an alternative delivery mechanism and shows that effects of a similar size can be achieved by holding people accountable through feedback text messages, without any meetings or peer pressure.