Why Don't the Poor Save More? Evidence from Health Savings Experiments

Abstract

Using data from a field experiment in Kenya, we document that providing individuals with simple informal savings technologies can substantially increase investment in preventative health and reduce vulnerability to health shocks.Simply providing a safe place to keep money was sufficient to increase health savings, through a mental accounting effect.Adding an earmarking feature was only helpful when funds were put towards emergencies; earmarking for preventative health reduced savings on average, because the liquidity cost of tying up money was too great.Providing social pressure and credit through a ROSCA-based savings scheme had very large effects.

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