The Economics and Psychology of Long-Term Savings and Pensions
The Economics and Psychology of Long-Term Savings and Pensions
7 July, 2020 •Similar Articles
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This policy brief describes lessons from a large-scale field experiment that utilizes a pension instrument to understand the determinants of long-term savings among low income entrepreneurs in rural and semi-urban Western India. With a majority of the Indian working population employed in the informal sector without access to social security benefits, savings and pension products, and minimal access to sources of credit, the financial vulnerability of these groups is of growing concern. As we attempt to economically empower these vulnerable groups, a key policy concern is encouraging them to voluntary participate in long term savings, irrespective of variations in time and income flows – a move which will go a long way in ensuring financial security. We use a commitment savings pension instrument to explore different demand-side factors to inform policy on incentivizing long term savings behavior among low income households across developing countries.