“When Defaults Matter: Behavioral Economics and The Use of Savings Accounts in Malawi”

On Wednesday, November 23th, at 2.30pm, the NOVAFRICA Center welcomes Jessica Goldberg from University of Maryland to present her work.

Jessica Goldberg (University of Maryland)

We assess the propensity of owners of a savings account to switch to another, cheaper account, once fees are introduced to their hitherto free account, compared to that of a sample of new clients presented with the choice of opening one of the two accounts. We find strong evidence of an endowment effect. While 42 percent of account holders retained their original, expensive accounts, none of the new clients chose the expensive accounts. We exploit previous experimental variation in account usage and find that account holders that used their account more frequently are more likely to switch, suggesting that individuals familiar with the account exhibit behavior that is more consistent with neoclassical theory.

Please find further information about this seminar here.