Behavioral research suggests that self-control, procrastination, attention, and other behavioral factors may limit individuals’ ability to save for the long-term. New mobile money platforms in many developing countries are creating financial products that can help low- and moderate-income individuals overcome these barriers. Researchers partnered with a mobile money provider to test whether offering its employees the opportunity to automatically deposit a portion of their paycheck into a savings account increases long-term savings. Results showed that defaulting employees into a savings program and employer savings matches both increased savings. For employees identified as more likely to procrastinate, phone-based financial consultations also increased savings.
- 50 percent match: For employees in this group who made regular contributions to their M-Pasandaz account for at least 6 months, without making any withdrawals, Roshan matched half of what they saved, up to 10 percent of their salary.
- 25 percent match: For employees in this group who made regular contributions to their M-Pasandaz account for at least 6 months, without making any withdrawals, Roshan matched one quarter of what they saved, up to 10 percent of their salary.
- Comparison: Roshan did not match any portion of the savings for those in the third sub-group.
Two months after the initial intervention was underway, when voluntary contribution adjustments had slowed, the researchers implemented three additional interventions aimed at helping people overcome behavioral biases against saving:
- Personal Consultation: The firm called a randomly selected half of employees in the study to offer a personal consultation providing more information about their account. In the meetings, company representatives estimated the payouts under different contribution rates, and offered employees a chance to change their contribution rate. This intervention aimed to alleviate nonfinancial costs (such as time and effort) to participation.
- SMS reminders: Researchers randomly selected half of the employees in the study to receive a series of text messages, sent directly to employees by Roshan’s human resources office each month over several months. The text messages reminded employees of their current contribution rate and the phone number to call if they wished to change it. The text messages were designed to test if employees were not taking advantage of the savings accounts simply because they were unaware or had forgotten.
- Monthly phone surveys: Half of the sample was randomly selected to receive brief monthly surveys on financial behaviors and understanding of the M-Pasandaz account. These surveys potentially also addressed inattention by reminding employees of the program.
Baseline and endline surveys measured characteristics such as time inconsistency, the extent to which, in a hypothetical experience, participants would be willing to accept a smaller sum of money sooner or wait to receive a larger sum of money at a later date.