Matching Products with Preferences: Innovations in Commitment Savings for the Poor
Saving is hard for most people, rich or poor, educated or not. Setting aside even small sums of money on a regular basis requires a conscious trade-off between buying something now in favor of achieving long-term goals, and even the most prosperous struggle to translate this intention into sustained savings. Saving may be especially difficult for poor individuals, as daily needs and family obligations may distract attention from meeting savings goals. This seminar discusses implications of results from research that aim to help poor individuals overcome some of these barriers to saving.
Studies conducted by Innovations for Poverty Action researchers have shown that innovative savings products that allow individuals to set voluntary amounts and timelines can help them overcome other demands on their money and meet their goals. Products evaluated rigorously have included formal and informal hard commitment savings products with withdrawal restrictions, as well as soft commitment devices such as labeled savings accounts. Despite promising results, there is still much to learn about the interplay between commitment devices and end-user characteristics like time preferences and savings goals, as well as the mechanisms through which commitment devices work for the poor.
Greenroom Interview: Key Takeaways
Jessica Goldberg is an assistant professor at the University of Maryland and a postdoctoral research fellow at the Center for Global Development. Her research focuses on the ways that people in developing countries earn, spend, and save money. She is particularly interested in how financial market imperfections, behavioral factors, or other obstacles to borrowing and saving affect decisions about working and consuming. She is studying how people in rural communities adjust their labor supply to changes in wages and non-wage income; collaborating with researchers at the World Bank and officials at the Malawi Social Action Fund to study the program’s roles in consumption smoothing and investment in agricultural inputs; and developing new projects to understand how social pressure to share income affects labor supply and responsiveness to wage incentives. Goldberg received her Ph.D in Economics and Public Policy from the University of Michigan in 2011, and also holds an MPA from the Woodrow Wilson School at Princeton University and a BA in economics and political science from Stanford University.
n is the Director of the Microsavings and Payments Innovation Inititative at Yale University. Ratan has joined Yale and the team at Innovations for Poverty Action in New Haven in June 2011. In her years at the Microsoft Research Labs in Bangalore, Ratan gained extensive experience leading projects on the role of technology in enabling social and economic development and poverty alleviation. She has an undergraduate degree in Economics from Wellesley College and a Master’s degree in Public Administration and International Development (MPA/ID) from the Kennedy School at Harvard University.
Jonathan Robinson is an assistant professor of economics at the University of California, Santa Cruz, and a research affiliate of Innovations for Poverty in Action and the Abdul Latif Jameel Poverty Action Lab. His current research is focused on the effect of providing basic financial access to people in developing countries, and has included evaluations of a program to provide savings accounts to micro-entrepreneurs and a program which allowed farmers to commit to save harvest income for future fertilizer investment. His research also includes studies which examine the effect that risk (particularly health risk) has on the decisions that people make, and the effect that access to risk-coping mechanisms such as savings accounts have on these decisions. He received his Ph.D. from Princeton University in 2007.
Jason Wolfe i
s Senior Household Economic Strengthening Advisor with USAID's Office of HIV/AIDS, where he supports PEPFAR programs to improve the economic circumstances of households affected by HIV/AIDS. Previously he served for five years with USAID’s Microenterprise Development office promoting inclusive value chain development, managing the Enterprise Development Implementation Grant Program, contributing to knowledge management and collaborative learning efforts, and coordinating special initiatives with youth, HIV/AIDS-affected households, and conflict-affected environments. Wolfe has 14 years of experience designing, managing, and assessing market development and technology transfer projects in 45 countries, with a particular emphasis on poor, rural, and marginalized communities.