08
Nov
2024
The Power of Labelling: Enhancing the Impact of Cash Transfers through Mental Accounting
with Patricio Dalton (Tilburg University)
Luxembourg Institute of Socio-Economic Research (LISER)
Maison des Sciences Humaines
11, Porte des Sciences
L-4366 Esch-sur-Alzette / Belval
LISER Salle de Conference, 1st Floor
02:00 pm
03:30 pm
For inquiries:
3E-seminars@liser.lu

Abstract

Unconditional cash transfers are a popular social protection policy, but their impact is often short-lived. One plausible explanation is that recipients struggle to budget and plan, leading to insufficient savings for future productive investments. Through an RCT involving 861 refugee households in Uganda, we test whether a mental accounting intervention—where households divide their monthly cash transfer across four labeled envelopes (Education, Health, Investments, Others), instead of the status quo of one
unlabeled envelope—can help recipients overcome commitment challenges. Immediately after the cash transfer program ends, Treatment households exhibit greater savings and have taken out larger loans. One year later, these households have made more productive investments, particularly in lumpy investments, resulting in higher monthly income and savings, while also paying off their debt. These outcomes are driven by households that continue using the labeled envelopes one year after the cash transfer program ends, who are also more likely to report that the envelopes help with budgeting, planning, and disciplining spending.

Supported by the Luxembourg National Research Fund (PRIDE19/14233191).


More about the 3E DTU

The Doctoral Training Unit (DTU) 3E - Experiments, Ethics and Economics - consists of an interdisciplinary consortium of 9 social scientists who use scientific experiments involving human subjects in their research. The objective of the consortium is to create a formal link for collaboration across the three existing social science research laboratories in Luxembourg, with the aim to push forward the state-of-the-art of what we know about human behavior in economic interactions. The DTU 3E gathers members across 5 Luxembourgish research units:

(1) Luxembourg Institute of Socio-Economic Research LISER
(2) Institute for Health and Behavior IHB (Faculty of Humanities FLSHASE, University of Luxembourg UL)
(3) Institute of Cognitive Science and Assessment COSA (FLSHASE, UL)
(4) Luxembourg School of Finance LSF (Faculty of Law, Economics and Finance FDEF, UL)
(5) Luxembourg Centre of Logistics LCL (Economics Research Centre CREA, FDEF, UL)