Testing strategies to increase saving in individual development account programs

Abstract

A series of randomized field experiments tests whether saving rates in a federally funded, matched, savings program for low-income families – the Individual Development Account program – can be improved through insights from behavioral economics. We test the impact of: (a) holding savers accountable for making savings deposits, (b) increasing the frequency with which deposits are made, and (c) introducing a lottery-based incentive structure. We find small, positive effects of the frequency and lottery treatments on cumulative savings. We investigate reasons for the modest effects of the treatments using interviews with study participants.