Employees at a large firm were automatically enrolled in a mobile-phone banking-based savings account

Employees at a large firm were automatically enrolled in a mobile-phone banking-based savings account with an automatic deposit feature. Employees assigned to the treatment group were enrolled in a savings scheme where 5% of their salary was automatically deposited into their mobile savings account. The control group was not subject to the automatic contribution scheme. Additionally, one-third of the workers were randomly assigned to receive matched incentives of 0%, 25%, or 50% as an additional exploration.

Impact:

Enrolling employees in a 5% default contribution and offering a 50% matching incentive both increased savings by 40 percentage points compared to the control group. More importantly, individuals actively continued to save after the experiment ended and were also more confident about their ability to meet financial obligations – 18 months after the intervention, those assigned to a 5% default savings had higher savings balances. Employees in the control group given a 50% matching incentive increased their likelihood of contributing to savings by about 40 percentage points, roughly equivalent to the effect on the treatment group with no matched incentive.

Source:

Blumenstock, Callen and Ghani, “Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan”, American Economic Review, 2018, 108 (10), 2868-2901.