Cash in hand and savings decisions
In: Journal of Economic Behavior & Organization, Jg. 188 (2021-08-01), S. 1206
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Keywords Cash; Savings; Field experiment; Individual choice Highlights * Experimental investigation of how the physical transaction of cash affects savings. * Female microfinance borrowers in the Philippines decide about real-life savings. * Results show a robust and well-powered null effect of cash in hand in field setting. * Tangibility of cash does not influence savings, contrary to evidence from spending. Abstract Cash is an important means of transaction, generally assumed to be fungible. However, behavioral economics and consumer research show that 'cash in hand', physically holding on to cash and then handing it away, affects purchasing decisions. I study how cash in hand influences decisions in a different, but very important domain: savings. Savings accounts are a promising tool for reducing poverty, but the use of savings accounts is often puzzlingly low. Holding on to cash that needs to be physically deposited into a savings account may increase the psychological costs of saving. This study experimentally identifies the causal effect of cash in hand on savings deposits of female microfinance clients in the Philippines. In contrast to many laboratory and several field studies with similar interventions, I do not find reduced savings deposits due to cash in hand. Author Affiliation: (a) RWTH Aachen University, School of Business and Economics, Templergraben 64, Aachen 52056, Germany (b) Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, UK Article History: Received 18 May 2020; Revised 24 May 2021; Accepted 4 June 2021 (footnote)[white star] I am grateful to Ahon Sa Hirap for great collaboration in the implementation process. The paper benefited from many helpful comments by Vojta Bartos, Davide Cantoni, Alexander Cappelen, Kristina Czura, Marvin Deversi, Florian Englmaier, Eleonora Guarnieri, Mathias Iwanowsky, Martin Kocher, Friederike Lenel, Daniela Puzzello, Laura Schechter, Simeon Schudy, Peter Schwardmann, Vincent Somville, Bertil Tungodden, Vanessa Valero, my ESA mentoring group and three anonymous reviewers. I thank participants at numerous conferences and seminars, and my interviewers Cathy Arzobal, Liezl Baldorado, Fhernellyn Estiva, Darlene Romo and Patricia Tolentino. This work was supported by the Elite Network of Bavaria (International Graduate Program Evidence-Based Economics) and the Department of Economics at LMU Munich. This study was approved by the Department of Economics' Ethics Committee at LMU Munich (2016-13) and is registered at the AEA Registry (AEARCTR-0001870). Byline: Lisa Spantig [Lisa.Spantig@rwth-aachen.de] (a,b)
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Cash in hand and savings decisions
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Autor/in / Beteiligte Person: | Spantig, Lisa |
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Zeitschrift: | Journal of Economic Behavior & Organization, Jg. 188 (2021-08-01), S. 1206 |
Veröffentlichung: | 2021 |
Medientyp: | academicJournal |
ISSN: | 0167-2681 (print) |
DOI: | 10.1016/j.jebo.2021.06.008 |
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