SEED Commitment Savings Account — Philippines

Summary

The SEED experiment tested a counterintuitive proposition: that people would voluntarily choose a savings product that restricted their own access to money — and that this restriction would help them save more. Both hypotheses proved correct. Twenty-eight percent of those offered the account opened one — a high take-up rate for a product that explicitly reduced financial flexibility. Those who opened accounts showed substantial increases in savings balances. The mechanism was the commitment device itself: people who knew they had self-control problems with saving (measured by a prior hyperbolic discounting elicitation) were significantly more likely to take up the SEED account. The experiment was among the first to test the behavioral economics prediction that people will sometimes prefer to constrain their own future choices — 'tying themselves to the mast' — when they recognize that future-self will make decisions they will regret.

Research question

"Do commitment savings accounts — which restrict access to funds until a self-set goal is reached — increase savings and economic outcomes for low-income households?"

Methodology

Result

Positive

28% of those offered SEED accounts opened one; savings balances increased by 82 pesos per week (approximately 81% of control mean) for account openers; no significant spillover to those offered but who declined

Evidence strength

Strong

Randomized trial, replicated across multiple sites or studies.

Replication status

Replicated