Creating a Cell Phone-Based Defined Contribution Account

Researchers Michael Callen, Joshua Blumenstock and Tarek Ghani build on an earlier CFSP project to implement a randomized field experiment in Afghanistan to test the effects of mobile phone-based defined contribution accounts ("M-Pasandaaz") on savings outcomes in a private firm with approximately 1,200 employees. This study explores the extent to which a mobile phone-based defined contribution account can improve the financial capabilities and welfare outcomes for these employees.

Research Questions:

Can a salary-linked savings product create an enduring increase in savings, even in a highly uncertain environment?
What explanation for why Afghans have low levels of formal savings is most accurate in the data: present-biased preferences; aversion to complex decisions; distrust of formal banks; or liquidity constraints?
Which constraints can a defined contribution product solve?
How does an individual's default enrollment status impact rates of participation and accumulated savings?
How can defined contribution accounts be best designed to encourage contributions?

Data Notes:

Survey Timeframe:

Beginning September 2013

Survey Size:

1,200 workers across seven Afghan provinces

Sample:

Employees of a large private Afghan firm

Modules:

Face-to-face surveys
Phone surveys

Intervention:

The sample is randomized into three treatment arms: 400 will participate in a flexible salary-linked account; 400 will participate in a commitment salary-linked account; and 400 who must opt-out.

Partners:

Roshan

Status:

Completed