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Mental Accounting and Mobile Banking: Can labeling an M-PESA account increase savings?

  • October 2015
  • Working Paper
Dizon, Felipe, Gong, Erick & Jones, Kelly

Abstract: Working with a sample of vulnerable women in Kenya, we conduct a field experiment involving a savings intervention consisting of a labeled mobile banking (M-PESA) account, savings goal setting, and text message reminders. The effect of the intervention on savings is positive but imprecisely estimated. The intervention did lead to statistically significant increases in savings for those who report having problems saving due to spending on temptation goods. In addition, individuals with temptation constraints to savings spent less on temptation goods as a result of the intervention. We provide suggestive evidence that the increase in savings for those facing temptation constraints was most likely due to the labeled M-PESA account. This suggests that the labeling of a mobile banking savings account may induce mental accounting and can relax temptation constraints to savings.


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