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.
- 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?
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.