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Applying Behavioral Economics to Improve Microsavings Outcomes

Many of the world’s toughest problems, including persistent poverty, are rooted in individual behavior. Behavioral economics and more specifically the emerging practice of behavioral design offer powerful tools to solve these social problems at large scale. Behavioral design applies insights from decades of academic research in behavioral economics and behavioral psychology to develop low-cost interventions with large effects.

This paper delivers key lessons from a behavioral design project undertaken by ideas42 and Grameen Foundation to improve savings outcomes for clients of CARD Bank. We demonstrate the power of applying behavioral design and offer specific implications for practitioners working in financial inclusion and economic development.