To understand why the poor are constrained in their ability to save for investments in preventative health products, two researchers designed a field experiment in rural Kenya in which they randomly varied access to four innovative saving technologies. By observing the impact of these various technologies on asset accumulation, and by examining which types of people benefit most from them, the researchers were able to identify the key barriers to saving. This exercise is based on: Dupas, Pascaline and Jonathan Robinson. 2013. Why Don't the Poor Save More? Evidence from Health Savings Experiments.
They worked with 113 ROSCAs (Rotating Savings and Credit Associations). A ROSCA is a group of individuals who come together and make regular cyclical contributions to a fund (called the “pot”), which is then given as a lump sum to one member in each cycle. In their experiment, Dupas and Robinson randomly assigned 113 ROSCAs to one of the five study arms. In this exercise, we will focus on three study arms (one control and two treatment arms). The data file, `rosca.csv` is extracted from their original data, excluding individuals who have received multiple treatments for the sake of simplicity.
Individuals in all study arms were encouraged to save for health and were asked to set a health goal for themselves at the beginning of the study. In the first treatment group (*Safe Box*), respondents were given a box locked with a padlock, and the key to the padlock was provided to the participants. They were asked to record what health product they were saving for and its cost. This treatment is designed to estimate the effect of having a safe and designated storage technology for preventative health savings.
In the second treatment group (*Locked Box*), respondents were given a locked box, but not the key to the padlock. The respondents were instructed to call the program officer once they had reached their saving goal, and the program officer would then meet the participant and open the *Locked Box* at the shop where the product is purchased. Compared to the safe box, the locked box offered stronger commitment through earmarking (the money saved could only be used for the prespecified purpose).
Participants are interviewed again 6 months and 12 months later. In this exercise, our outcome of interest is the amount (in Kenyan shilling) spent on preventative health products after 12 months. Descriptions of the relevant variables in the data file `rosca.csv` ( Download CSV Here) are:
| Name | Description |
|---|---|
bg_female |
1 if female, and 0 otherwise |
bg_married |
1 if married, and 0 otherwise |
bg_b1_age |
Age at baseline |
encouragement |
1 if encouragement only (control group), and 0 otherwise |
safe_box |
1 if safe box treatment, and 0 otherwise |
locked_box |
1 if lock box treatment, and 0 otherwise |
fol2_amtinvest |
Amount invested in health products |
has_followup2 |
1 if appears in 2nd follow-up (after 12 months), and 0 otherwise |