Nava Ashraf, Dean Karlan, and Wesley Yin, “Tying Odysseus to the Mast: Evidence From a Commitment Savings Product in the Philippines.” Quarterly Journal of Economics 121(2): 635-672, 2006.
• The authors conduct a natural field experiment to see if people will open a savings account that has no advantages except for barriers to withdrawal. The offered SEED accounts (“Save, Earn, Enjoy Deposits”) prevent depositors from accessing funds unless a target deposit amount or date is met. Most of the participants who opened accounts chose the date-based method.
• Individuals were randomly chosen to be offered a SEED account, and about 28% of those who received the offer accepted it. Others were offered nothing or were given encouragement to save more. All the people involved were bank clients who already had a regular savings account.
• All participants were given a survey aimed at identifying customers who had time inconsistent preferences. The survey indicated that 27.5% of respondents were hyperbolic, while a surprising 19.8% were reverse hyperbolic, more patient today than for future choices. Hyperbolic women (but not men) are more likely to take up the SEED offer.
• The Intent to Treat (ITT) effect reveals the impact of being offered (not necessarily accepting) the SEED account. The ITT effect involved a significant increase in savings. (The encouragement-to-save option did not increase savings.) The Treatment on the Treated effect reveals the increase in savings for those who opened a SEED account relative to controls who would have opened one if offered; here, it is about four times higher than the ITT effect.
• Is it ethical to offer relatively poor people a type of savings account whereby it is more than conceivable that they will never be able to recover their funds because they did not reach their savings goal? After one year, only 6 of the 62 participants who opened an amount-based account achieved their goal and hence could access their funds (page 657).
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