Abhijit Banerjee, Esteban Puentes
ABSTRACT
Individual behavioral biases can affect savings behavior. We conduct an experiment to
evaluate different strategies to increase savings. We compare an automatic savings plan (or
default rule), monthly reminders, and a rule-of-thumb savings package that appeals to
careful spending. We find 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.