Insurance Through Savings Accounts: Evidence From A Randomized Field Experiment

Poverty is often characterized not only by low average income, but also by high variable income and expenditures, and a lack of access to insurance services that can help smooth consumption. Women are often especially vulnerable to such economic instability. This randomized field experiment among mostly female micro-entrepreneurs shows that access to a formal savings account can provide a vehicle for self-insurance that reduces the impact of economic difficulties. Since self-control is often a challenge when it comes to reaching ones savings goal, we investigate what mechanisms can help participants increase their savings. We find that follow-ups through self-help peer group meetings or through automatic text messages are highly effective tools to help those without access to formal commitment devices increase their precautionary savings.





R. Abraham, F. Kast, D. Pomeranz


October 1, 2011

Media Type:



Social Entrepreneurship