Our project showed that it is possible to encourage low-income Tanzanians to increase savings by up to 11% using the right messages. The Project How to encourage people Project participants received tailored SMS messages to save money over a period of 14 days in a randomized controlled trial (RCT). Participants with similar profiles were divided into five groups: the control group received no messages, and the other four groups received SMS In 2014, Tanzania’s regulators made the country messages applying different behavioral concepts. the first in Sub-Saharan Africa to permit interest payments on mobile money wallets. Currently, annual The first group received generic SMS messages that interest rates range from seven to nine percent, four reminded them to save. The second group received times greater than the average deposit in a US bank. messages that fostered their ability to take control Despite this, mobile savings balances remain low, of their actions, using insights from psychology that especially among low-income users. emphasize agency and control. The third group’s messages were tailored to each individual’s savings In order to understand what influences the saving purpose, utilizing mental accounting to determine behaviors of low-income Tanzanians, our team, eMBeD, whether labeling the account for a specific outcome together with the Consultative Group to Assist the would lead to greater savings by making the goal more Poor (CGAP), Financial Sector Deepening Tanzania, the salient. And the fourth group received messages that Busara Center for Behavioral Economics, and Airtel informed them of how much top savers in the group Money Tanzania worked on a savings study informed had saved, taking a cue from tested success using social by behavioral economics. norms to increase a desired behavior. The Results Not every treatment worked to improve savings Partnerships between private sector and rates, and some had negative outcomes. development institutions can lead to greater Our findings show that although behavioral science can financial inclusion, and benefit both. encourage people to save, the impacts are not uniform The company with which we partnered now has across interventions. The most successful treatment a better understanding of the behavioral insights used social norms, comparing individual saving rates to driving this new market, and can therefore tailor that of better savers within their group, and increased products and messaging accordingly. Similarly, the participants’ savings by up to 11%. However, the group World Bank is ensuring that mobile wallet markets that received messages about their potential to take are inclusive. control of their actions saved even less than the control group did. AVERAGE AMOUNT OF MONEY SAVED PER DAY (%) Using both lab and field experiments can 80 improve methodology and outcomes. 70 One innovative aspect of this project was the application of a methodology that blended the precision of a 60 laboratory experiment with the external validity of 50 fieldwork. The 550 participants were typical mobile- 40 money users who responded to SMS messages over a 30 two-week period. By doing so, they earned extra income, which they could choose to spend or save every day. This 20 replicated the decisions faced outside the experimental 10 setting, within a compressed time frame, while allowing 0 the observation of detailed behavioral responses to Agency Control Pure Mental Social carefully constructed and targeted interventions. SMS Control Accounting Influence Policy Implications Global evidence suggests that new policies don’t In addition, supply and demand for financial services always lead to the desired outcomes – in working to must align for the market to run smoothly, and barriers increase savings rates in Tanzania, high interest rates such as a lack of information and cultural factors can for mobile money savings don’t incentivize higher exclude the poor. Financial service providers will almost saving rates. Attention to the social, certainly be from the private sector; these public- psychological, and economic factors that affect what people think and do The wrong message private partnerships are therefore essential to improve services on the supply side, and is crucial to design effective policy. can be worse than uptake on the demand side. By partnering with In tandem, testing before scaling is Airtel Money Tanzania, we facilitated a better an essential part of incorporating no message at all. understanding of these barriers, and encouraged behavioral science into policy; and stimulated homegrown solutions that will as eMBeD and our partners found, the wrong have an impact long after the funding stops. Now that’s message can be worse than no message at all. helping to build markets that really work for the poor. About eMBeD The Mind, Behavior, and Development Unit (eMBeD), the World Bank’s behavioral science team in the Poverty and Equity Global Practice, works closely with project teams, governments, and other partners to diagnose, design, and evaluate behaviorally informed interventions. By collaborating with a worldwide network of scientists and practitioners,  the eMBeD team provides answers to important economic and social questions, and contributes to the global effort to eliminate poverty and enhance equity. Stay Connected eMBeD@worldbank.org #embed_wb worldbank.org/embed bit.ly/eMBeDNews