Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile

Felipe  Kast; Dina  Pomeranz

Working Paper | HBS Working Paper Series | 2014

Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile

by Felipe Kast and Dina Pomeranz

Abstract

Poverty is often characterized not only by low and unstable income, but also by heavy debt burdens. We find that reducing barriers to saving through access to free savings accounts decreases participants' short-term debt by about 20%. In addition, participants who experience an economic shock have less need to reduce consumption, and subjective well-being improves significantly. Precautionary savings and credit therefore act as substitutes in providing self-insurance, and participants prefer borrowing less when a free formal savings account is available. Take-up patterns suggest that requests by others for participants to share their resources may be a key obstacle to saving.

Keywords: Saving; Poverty; Borrowing and Debt; Chile;

Language: English

Format: Print

51 pages

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Citation:

Kast, Felipe, and Dina Pomeranz. "Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile." NBER Working Paper Series, No. 20239, June 2014. (Revision requested by Journal of Public Economics. Featured in La Tercera. Harvard Business School Working Paper, No. 14-001, July 2013)

Article | Public Finance Review | January 2017

Impact Evaluation Methods in Public Economics: A Brief Introduction to Randomized Evaluations and Comparison with Other Methods

Dina Pomeranz

Recent years have seen a large expansion in the use of rigorous impact evaluation techniques. Increasingly, public administrations are collaborating with academic economists and other quantitative social scientists to apply such rigorous methods to the study of public finance. These developments allow for more reliable measurements of the effects of different policy options on the behavioral responses of citizens, firm owners, or public officials. They can help decision makers in tax administrations, public procurement offices, and other public agencies design programs informed by well-founded evidence. This paper provides an introductory overview of the most frequently used impact evaluation methods. It is aimed at facilitating communication and collaboration between practitioners and academics by introducing key vocabulary and concepts used in rigorous impact evaluation methods, starting with randomized controlled trials and comparing them with other methods ranging from simple pre-post analysis to difference-in-differences, matching estimations, and regression discontinuity designs.

Keywords: Practice; Public Sector; Research; Policy; Performance Evaluation;

Citation:

Pomeranz, Dina. "Impact Evaluation Methods in Public Economics: A Brief Introduction to Randomized Evaluations and Comparison with Other Methods." Special Issue on Expanding the Frontier of Behavioral Public Economics. Public Finance Review 45, no. 1 (January 2017): 10–43. (Published early online November 5, 2015. Spanish version available by clicking on "Details.") View Details

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Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile

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Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile

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