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American Economic Review Vol. 103 No. 3 2013

Deposit Collecting: Unbundling the Role of Frequency, Salience, and Habit Formation in Generating Savings

Suresh de Mel1; Craig McIntosh2; Christopher Woodruff3

1 Department of Economics, University of Peradeniya, Peradeniya 20400, Sri Lanka. · 2 Graduate School of International Relations and Pacific Studies, University of California-San Diego, La Jolla, CA 92093. · 3 Department of Economics, University of Warwick, Coventry CV4 7AL, UK.

Abstract

We report on a field experiment using several methods for collecting deposits made in formal bank accounts in rural areas in Sri Lanka. We find that only frequent, face-to-face collection increases aggregate household savings. Collection involving community lock boxes increases balances at the collecting bank, but not overall household savings. Only community box collection appears to have the possibility of being financially viable. The various collection methods allow us to unbundle the role of frequency, salience and habit formation in deposit decisions. We find that frequency and salience affect the number of transactions, but not the level of savings.

DOI
10.1257/aer.103.3.387
Volume
103
Issue
3
Pages
387-392
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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