Behavioral Science for Public Policy | August 17 - 19, 2021 - Applications are now open for university students in Kenya.
Learn More

Using Lotteries to Encourage Savings: Experimental Evidence from Kenya

Abstract

In this study, we evaluate the provision of lottery-linked deposit accounts (LLDA) – a savings scheme incorporating lottery-like payoffs to traditional savings accounts. We provide a mobile savings product to 311 informal residents in Nairobi, Kenya and observe account activity over a 60-day period. We find that respondents with LLDAs made 42% more deposits on average over the project period than respondents receiving a matched incentive. This increase in account activity is due to respondents making more deposits per day in order to enter the lottery. We do not, however, observe any effects due to the lottery incentive on amount deposited over the project period. We show that when presented with potential winnings from previous days, respondents with LLDAs increased self-reported gambling activity by 15%. Our results suggest that LLDAs are a promising tool to improve savings among the poor and that product design has considerable implications on gambling behavior.

  • Country
    Kenya
  • Behavior
    Cognitive Ability / Executive Function,Temporal Discounting
  • Sector
    Methods/Measurement
  • Authors
    Justin Abraham, Merve Akbas, Dan Ariely, Chaning Jang
We're hiring!
  • Get monthly updates on our experiences from the frontlines of applied Behavioral Science.