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  3. American Economic Journal: Applied Economics
  4. July 2018
  5. The Persistent Power of Behavioral Change: Long-Run Impacts of Temporary Savings Subsidies for the Poor

The Persistent Power of Behavioral Change: Long-Run Impacts of Temporary Savings Subsidies for the Poor

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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 2.5–3.5 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. In contrast, interest rates on joint accounts and modest cash payments did not significantly impact long-run economic outcomes.

Citation

Schaner, Simone. 2018. "The Persistent Power of Behavioral Change: Long-Run Impacts of Temporary Savings Subsidies for the Poor." American Economic Journal: Applied Economics, 10 (3): 67-100. DOI: 10.1257/app.20170453

Additional Materials

JEL Classification

  • C93 Field Experiments
  • D13 Household Production and Intrahousehold Allocation
  • D14 Household Saving; Personal Finance
  • D90 Micro-Based Behavioral Economics: General
  • G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
  • I32 Measurement and Analysis of Poverty
  • O12 Microeconomic Analyses of Economic Development
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