Can Precommitment Increase Savings Deposits? Evidence from a Tax Time Field Experiment

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Date: November 8 – 10, 2018
Location: Washington Marriott Wardman Park, Washington, DC

This work aims to encourage the saving of the tax refund through an experiment embedding behavioral interventions in a tax filing platform serving almost a million low- and moderate-income households. American households, and LMI households in particular, do not have enough savings for unforeseen drops in income or rise in expenses. Data from the Pew Charitable Trusts (2015a) found that 41% of households do not have enough liquid savings to cover a $2,000 expense; for low income families that rises to 78%. Financial emergencies are also commonplace: 60% of American households report experiencing a financial shock in the past year (Pew Charitable Trusts, 2015b). The tax refund offers a small period of relief from the low level of liquid funds that households have on hand and provides one of the few opportunities LMI households have to save.

Authors: Michal Grinstein-Weiss, Cynthia Cryder, and Emily A. Gallagher
Presenting author: Stephen Roll