Matching Products with Preferences: Innovations in Commitment Savings for the Poor (Event Resources)

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 will discuss the 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.