Savings by and for the Poor: A Research Review and Agenda

The poor can and do save, but often use formal or informal instruments that have high risk, high cost, and sub-optimal design. This could lead to undersaving compared to a world without market or behavioral frictions. Undersaving has important welfare consequences: variable consumption, low resilience to shocks, and foregone profitable investments. We lay out five sets of constraints that may hinder the adoption and effective usage of savings products and services by the poor: transaction costs, lack of trust and regulatory barriers, information and knowledge gaps, social constraints and behavioral biases. We discuss each in theory, and then summarize related empirical evidence, with a focus on recent field experiments. We then put forward key open areas for research and practice.


Issue Date:
2013-07
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/153267
Total Pages:
37
JEL Codes:
D12; D91; G21; O16
Series Statement:
Economic Growth Center Discussion Paper
1027




 Record created 2017-04-01, last modified 2017-08-27

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