Present-biased preferences, or the tendency to value immediate rewards over greater benefits in the future, may contribute to persistent poverty, preventing low-income households from accumulating savings, making investments, and rationing their resources over time. However, there is little rigorous evidence to confirm that present-biased preferences and related self-control problems lead to poor savings decisions. Researchers designed and tested a savings product that offered monetary rewards to low-income tax payers in the United States if they saved or committed to save their annual tax refund for a period of eight months. Results confirmed that the low-income filers had present-biased preferences and that the incentives increased the numbers of individuals who chose to save their taxes.

Many financial products such as 401k plans have been designed to help US consumers overcome limited self-control and limited attention in order to reach their savings goals. However, reaching low-income consumers with such behaviorally-designed financial products can be difficult. In the Bronx, NY, researchers evaluated ways to encourage “impulse savings” at a check casher, testing how free savings accounts coupled with prompts and incentives to make deposits—offered at the moment when people have cash in hand—impacted savings behavior and customer loyalty. Formal savings accounts provide a secure and structured way for households to build assets and plan for the future, but in 2013, 9.6 million Americans lacked a formal savings account. Researchers evaluated the impact of providing reminder messages and incentives to deposit into a free savings account on clients’ savings behavior and customer loyalty.

While many low-income Americans have costly debt, they typically spend only a small proportion of their tax rebates to repay those debts. In partnership with Baltimore CASH, researchers are introducing postcards that encourage low-income tax filers to use their tax rebates to pay off debt, and varying the timing of postcard delivery, to evaluate the impact of these nudges on debt repayment.

Researchers varied the proportion of travel grants offered to landless households in rural villages in Bangladesh to assess the impact of the grants on temporary migration and income during the agricultural lean season—one of the hardest economic times of the year due to drops in food affordability. Providing cash subsidies for seasonal migration not only benefited the migrants and their families, but also indirectly improved welfare for households who were not offered a cash subsidy and increased agricultural wages in origin labor markets.

In six countries researchers evaluated a multi-faceted approach aimed at improving the long-term income of the ultra-poor. They found that the approach had long-lasting economic and self-employment impacts and that the long-run benefits, measured in terms of household expenditures, outweighed their up-front costs. This evaluation summarizes the Pakistan site, which had similar effects as the other successful sites.

Researchers conducted a randomized evaluation to measure the impact of offering subsidies to connect to the power grid on the demand for rural electrification in Kenya. The study finds that demand falls rapidly as connection price increases, and that supply costs are very high.

Researchers conducted a randomized evaluation to test the impact of introducing a pay-as-you-go car insurance contract, which reduces minimum purchase requirements, to uninsured drivers in California. Applicants who were offered this type of insurance were nearly twice as likely to purchase car insurance than those who were offered a traditional car insurance contract, but this impact faded over time.

This study examines how reminders to file taxes affect tax filing decisions among low-income individuals who did not appear on a filed tax return. The results of two randomized evaluations demonstrate that one-time reminders increase tax filing—both to claim tax refunds as well as to voluntarily pay balances owed to the IRS.