Working Paper: NBER ID: w22534
Authors: Simone Schaner
Abstract: 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.
Keywords: savings; behavioral change; economic outcomes; randomized controlled trial
JEL Codes: D14; O1; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| individual interest rates (E43) | income (E25) |
| individual interest rates (E43) | assets (G32) |
| individual interest rates (E43) | entrepreneurship rates (L26) |
| individual interest rates (E43) | business profits (D33) |
| individual interest rates (E43) | business capital (G31) |
| joint interest rates (E43) | household public goods investment (H40) |
| joint interest rates (E43) | spousal financial decision-making (D14) |
| joint interest rates (E43) | income (E25) |
| joint interest rates (E43) | assets (G32) |