Pay Me Later: Savings Constraints and the Demand for Deferred Payments / Lasse Brune, Eric Chyn, Jason T. Kerwin.

Format:

Book

Author/Creator:

Brune, Lasse.

Contributor:

Chyn, Eric.

Kerwin, Jason T.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w28611.

NBER working paper series no. w28611

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

We study a simple savings scheme that allows workers to defer receipt of part of their wages for three months at zero interest. The scheme significantly increases savings during the deferral period, leading to higher post-disbursement spending on lumpy goods. Two years later, after two additional rounds of the savings scheme, we find that treated workers have made permanent improvements to their homes. The popularity of the scheme implies a lack of good alternative savings options. The results of a follow-up experiment suggest that demand for the scheme is partly due to its ability to address self-control issues.

Notes:

March 2021.

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