Savings by and for the Poor: A Research Review and Agenda


  • Dean Karlan,

    1. Yale University
    2. Innovations for Poverty Action
    3. Abdul Latif Jameel Poverty Action Lab at M.I.T
    4. NBER
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  • Aishwarya Lakshmi Ratan,

    Corresponding author
    1. Yale University
    2. Innovations for Poverty Action
    • Correspondence to: Aishwarya Lakshmi Ratan, Director, the Global Financial Inclusion (GFI) Initiative Yale University & Innovations for Poverty Action (IPA), 27 Hillhouse Avenue, Economic Growth Center, Room 37, New Haven, CT 06511, USA (

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  • Jonathan Zinman

    1. Innovations for Poverty Action
    2. Abdul Latif Jameel Poverty Action Lab at M.I.T
    3. NBER
    4. Dartmouth College
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  • Note: This paper was developed as a guiding white paper for the Yale Savings and Payments Research Fund, supported by the Bill and Melinda Gates Foundation, and with support from UNU-WIDER, based on a lecture at the 2011 Poverty and Behavioral Economics Conference. We are grateful to Jessica Goldberg, Jake Kendall, Daniel Radcliffe, and two anonymous referees for their helpful comments. We would like to acknowledge Cristobal Marshall's contributions to initial discussions around the key themes of the paper, and Anna Yalouris' contributions to the behavioral biases section. Angela Garcia Vargas, Sarahjane Phelan, and Gregory Dobbels provided excellent research assistance at different stages of this project. We thank Ravi Kanbur for nudging us to write this paper. All errors are our own.


The poor can and do save, but often use formal or informal instruments that have high risk, high cost, and limited functionality. This could lead to undersaving compared to a world without market or behavioral frictions. Undersaving can have important welfare consequences: variable consumption, low resilience to shocks, and foregone profitable investments. We lay out five sets of constraints that may hinder the adoption and effective usage of savings products and services by the poor: transaction costs, lack of trust and regulatory barriers, information and knowledge gaps, social constraints, and behavioral biases. We discuss each in theory, and then summarize related empirical evidence, with a focus on recent field experiments. We then put forward key open areas for research and practice.