Paper forthcoming in American Economic Journal: Applied Economics
“Saving by Default: Evidence from a Field Experiment in Rural India”, written by The Choice Lab researcher Vincent Somville, along with Lore Vandewalle (IHEID Geneva), is accepted for publication in American Economic Journal: Applied Economics
For further information, follow the link to the paper at American Economic Association’s website or read the abstract below.
|Access to banks is rapidly increasing worldwide, and allows account-based instead of cash transfers. We conduct a randomized experiment documenting the impact of the payment method on savings behavior. In India, we allocate identical weekly payments into a bank account (treated) or in cash (control). Savings on the account increase by 131% within three months, and the effect is long lasting. We also show that cash payments increase consumption and that - once everyone is paid in cash again – the saving patterns no longer differ. We interpret these findings as a default effect, and we further discuss plausible mechanisms.|