1. Motivation
Critics
Getting to the Top of Mind: How Reminders
Increase Saving
Dean Karlan, Margaret McConnell, Sendhil Mullainathan and
Jonathan Zinman
Newton Uncle Toe
African School Of Economics
December 7, 2016
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
2. Motivation
Critics
Motivation/Background
Calibrations of U.S. data suggest that extremely high short-
term discount rates are necessary to explain observed borrowing
patterns (Laibson, Repetto and Tobacman 2007).
Voluntary commitment devices help increase savings (Ashraf,
Karlan and Yin 2006b; Benartzi and Thaler 2004).
Default options have large effects on retirement savings deci-
sions (Madrian and Shea 2001; Beshears et al 2008)
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
3. Motivation
Critics
Research Questions
How does reminder increase savings?
Does limited attention play a role in under-saving?
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
5. Motivation
Critics
Preview of Findings
In the developing world, there is evidence of persistent borrow-
ing at high daily rates for predictable expenses (Ananth, Karlan
and Mullainathan 2007) even though several studies have found
that expanding access to savings accounts improves various
outcomes, including income-generation (Dupas and Robinson
2013; Karlan, Ratan, and Zinman 2014)
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
6. Motivation
Critics
Preview of Findings Cont’d
Laibson 1997; ODonoghue and Rabin 1999; Fudenberg and
Levine 2006; Banerjee and Mullainathan 2009-Used models
that emphasize time inconsistency and self-control problems to
explain both impatience and patience people exhibit, depending
on the horizon or good of choice.
Akerlof (1991) emphasized salience rather than costly self-control
as a driver of procrastination, Bordalo, Gennaioli, and
Shleifer (2013) emphasized salience as a driver of consumer
choice
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
10. Motivation
Critics
Data
Total sample for the Phillipines is 1,157
Total sample size for Peru is 2,436
Total sample size for Bolivia is 3,523
GRAND TOTAL OF SAMPLE SIZE of all three banks is 7,116
Location of Study: Bolivia is in central South America, Peru is
in west of South America and Philippines is in Southeast Asia
Year of Study:2008
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
11. Motivation
Critics
Identification Strategy
OLS Regression1
Yi = α + βRi + γZi + εi
Where
Yi is the savings by client i
R is an indicator that equals 1 if the bank randomly assigned
the client to receive any reminder, with no-reminder the omitted
category
Z is a vector of randomization conditions, other treatment as-
signments, and country fixed effects
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
12. Motivation
Critics
OLS Regression 2
Yi = α + β1Gi + β2Li + γZi + εi
where
Gi indicates that the individual was assigned to receive gain-
framed reminders
Li indicates loss-framed. No-reminder is again the omitted cat-
egory.
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
13. Motivation
Critics
OLS Regression 3
The Peru sample:
Yi = α + β1ICi + β2SEi + γZi + εi
where
ICi indicates that the individual was assigned reminders that
mentioned the interest rate incentive only
SEi indicates reminders that mentioned the specific expenditure
goal as well.
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
14. Motivation
Critics
OLS Regression 4
The Bolivia sample:
Yi = α + βi GLi + β2ICi + γZi + εi
where
GLi indicates that the individual was assigned to reminders
that mentioned only the savings goal (Aguinaldo, the year-end
bonus)
ICi indicates reminders that mention the life insurance incentive
as well
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
19. Motivation
Critics
Conclusion
Many pro-savings treatments can be reinterpreted as operating
through attention instead of, or in addition to, through self-
control with large transaction costs for undoing non-binding
commitments; e.g., opt-out default (Choi et al 2004); prepaid
fertilizer (Duflo, Kremer, and Robinson 2011) or deposit col-
lection (Ashraf, Karlan and Yin 2006a).
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
20. Motivation
Critics
Conclusion
Our experiment also generates results on the effects of two
reminder design elements that have received less scrutiny in
prior work: timing and content. The content variations suggest
that many reminders are actually not effective (although we
caution that our null results are imprecisely estimated), and
that the most effective ones are those that remind people of
both financial incentives and savings goals; it may be the case
that a savings reminder is effective if (and only if) it brings
multiple motivations for saving to the top of mind.
Reminder effects on saving are consistent with consumers being
relatively inattentive to future exceptional(infrequent, and often
relatively large) expenses (Sussman and Alter 2013), and that
reminders can increase saving by making these future expenses
more salient: bringing them to top of mind.
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
21. Motivation
Critics
Some critics/limitations
Lacks outcome data on the household to speak about aggre-
gate household savings, or more holistic measures of financial
condition (test messages that encourage saving with feedback
and peer pressure or information, on a sample of microcredit
borrowers).
Disadvantages to generalizability because its unknown whether
the results would hold for people without a clear savings plan
and/or goal
457 of the total sample size were dropped (69 in Peru, 276 in
Bolivia and 112 in the Philippines) which is 28.84 percent of the
total sample, because they were incorrectly assigned to differ-
ent reminder treatments since they had multiple accounts.(The
Importance and Effects of Sample Size-Sarah Marley (2014))
Newton Toe Getting to the Top of Mind: How Reminders Increase Saving
