Endowment Effects and Usage of Financial Products : Field Evidence from Malawi

Endowment Effects and Usage of Financial Products : Field Evidence from Malawi

When offered a choice between two savings accounts, prior account holders are significantly less likely to switch to a cheaper account, compared with new subjects without a prior account. While 49 percent of account holders retained their original,...

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Bibliographic Details
Main Authors: Gine, Xavier, Goldberg, Jessica
Format: Working Paper
Language:English
Published: Washington, DC: World Bank 2018
Subjects:
SAVINGS
ENDOWMENT EFFECT
FIELD EXPERIMENT
SAVINGS ACCOUNTS
Online Access:http://documents.worldbank.org/curated/en/815821536173881140/Endowment-Effects-and-Usage-of-Financial-Products-Field-Evidence-from-Malawi
http://hdl.handle.net/10986/30421
id okr-10986-30421
recordtype oai_dc
spelling okr-10986-304212021-06-08T14:42:47Z Endowment Effects and Usage of Financial Products : Field Evidence from Malawi Gine, Xavier Goldberg, Jessica SAVINGS ENDOWMENT EFFECT FIELD EXPERIMENT SAVINGS ACCOUNTS When offered a choice between two savings accounts, prior account holders are significantly less likely to switch to a cheaper account, compared with new subjects without a prior account. While 49 percent of account holders retained their original, expensive accounts, none of the new subjects who opened an account chose the expensive one. This finding is consistent with the "endowment effect." Exploiting previous experimental variation in account usage among prior account holders, the paper finds that the endowment effect disappears among those with higher induced usage. This finding suggests that familiarity with the account can mitigate behavioral anomalies and improve financial decision-making. 2018-09-13T21:10:54Z 2018-09-13T21:10:54Z 2018-09 Working Paper http://documents.worldbank.org/curated/en/815821536173881140/Endowment-Effects-and-Usage-of-Financial-Products-Field-Evidence-from-Malawi http://hdl.handle.net/10986/30421 English Policy Research Working Paper;No. 8576 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC: World Bank Publications & Research Publications & Research :: Policy Research Working Paper Africa Malawi
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic SAVINGS
ENDOWMENT EFFECT
FIELD EXPERIMENT
SAVINGS ACCOUNTS
spellingShingle SAVINGS
ENDOWMENT EFFECT
FIELD EXPERIMENT
SAVINGS ACCOUNTS
Gine, Xavier
Goldberg, Jessica
Endowment Effects and Usage of Financial Products : Field Evidence from Malawi
geographic_facet Africa
Malawi
relation Policy Research Working Paper;No. 8576
description When offered a choice between two savings accounts, prior account holders are significantly less likely to switch to a cheaper account, compared with new subjects without a prior account. While 49 percent of account holders retained their original, expensive accounts, none of the new subjects who opened an account chose the expensive one. This finding is consistent with the "endowment effect." Exploiting previous experimental variation in account usage among prior account holders, the paper finds that the endowment effect disappears among those with higher induced usage. This finding suggests that familiarity with the account can mitigate behavioral anomalies and improve financial decision-making.
format Working Paper
author Gine, Xavier
Goldberg, Jessica
author_facet Gine, Xavier
Goldberg, Jessica
author_sort Gine, Xavier
title Endowment Effects and Usage of Financial Products : Field Evidence from Malawi
title_short Endowment Effects and Usage of Financial Products : Field Evidence from Malawi
title_full Endowment Effects and Usage of Financial Products : Field Evidence from Malawi
title_fullStr Endowment Effects and Usage of Financial Products : Field Evidence from Malawi
title_full_unstemmed Endowment Effects and Usage of Financial Products : Field Evidence from Malawi
title_sort endowment effects and usage of financial products : field evidence from malawi
publisher Washington, DC: World Bank
publishDate 2018
url http://documents.worldbank.org/curated/en/815821536173881140/Endowment-Effects-and-Usage-of-Financial-Products-Field-Evidence-from-Malawi
http://hdl.handle.net/10986/30421
_version_ 1764471960136318976

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