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Social Networks, Reputation and Commitment: Evidence from a Savings Monitors Experiment

Nov 2016
SCID Working Paper
572
By  Emily Breza, Arun G. Chandrasekhar
We study whether individuals save more when information about their savings is shared with another village member (a “monitor”). We focus on whether the monitor’s effectiveness depends on her network position. Central monitors may be better able to disseminate information, and more proximate monitors may pass information to individuals who interact with the saver frequently. In 30 villages, we randomly assign monitors. Average monitors increase savings by 35 percent. A one-standard deviation more central monitor increases savings by 14 percent; increasing proximity from social distance three to two increases savings by 16 percent. The increased savings persist over a year after the intervention’s end, and monitored savers better respond to shocks. Information flows. 63 percent of monitors tell others about the saver’s progress. 15 months later, others know more about the saver’s progress and believe she is responsible if the saver was assigned a more central monitor. To benchmark the results, in 30 other villages, savers choose their monitors. Monitored savers save similar amounts and non-monitored savers increase their savings relative to their random-assignment village counterparts.
Publication Keywords: 
Reputation
Savings