The presence of behavioral biases may represent significant barriers to saving that prevent households from sufficiently preparing for both known and unknown future financial needs. Challenges associated with saving may be magnified in the developing country context, where financial institutions offer few formal products designed to enable individuals to overcome behavioral biases. This research project aims to test whether offering multiple purpose-labeled savings accounts alone or in combination with an automatic deposit mechanism can help reduce barriers to saving and enable households to meet their savings goals. Specifically, the research team aims to test whether offering multiple labeled accounts can help households identify and commit to distinct savings goals, and whether an automatic deposit mechanism can enable households to overcome challenges associated with self-control and present-biasedness and align actual savings behavior more closely with desired savings behavior. In the first phase of the project, the researchers will conduct a small pilot with up to 150 government employees in Addis Ababa, Ethiopia. Goals for the pilot are to develop a better understanding of current savings patterns and barriers to saving among representative households, test out and refine various features of the savings account product and deposit mechanism, and gain a preliminary sense of take up and account usage. They intend for findings from the pilot project to inform the design of a full-scale randomized control trial testing whether purpose labeled accounts and/or automatic deposits can encourage more effective formal savings behavior in a developing country context.
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