Better strategies for saving more: Evidence from three interventions in Chile

Individual behavioural biases can affect savings behaviour. Abdul Latif Jameel Poverty Action Lab (J-PAL) co-founder and co-director, Abhijit Banerjee, along with researchers Claudia Martínez and Estaban Puentes, conduct an experiment to evaluate different strategies to increase savings. They compare an automatic savings plan (or default rule), monthly reminders and a rule-of-thumb savings package that appeals to careful spending. This working paper finds that rule-of-thumb and default rules can increase savings for one year after the intervention. In contrast, reminders can reduce account balances and debt levels. The increase in savings under the default rule is produced by a (mechanical) increase in deposits, but savings is later decreased by an increase in withdrawals.