Financial Incentive Encouragement for Low-Baseline Take-up Rates
Voluntary participation in financial education workshops and adoption of formal financial products in field experiments frequently suffer from severe initial non-attendance and low take-up due to participant opportunity costs.
Picture this
Imagine hosting a free community budgeting workshop where almost no one attends because travel costs and lost work hours outweigh interest. Offering a small travel stipend offsets those immediate friction costs, causing attendance to jump dramatically.
What the evidence says
Unincentivized workshop participation yielded only 36 attendees out of 487 invited and 4 savings account sign-ups out of 438; adding financial incentives and revisits boosted final workshop participation to 38.9%–41.4% (p < 0.01) and micro-insurance take-up to 25.1%–28.0% (p < 0.01).
- Who
- N = 1,800 transnational households in Cabanatuan City and surrounding localities, Philippines.
- How
- Randomized encouragement design modified mid-study to provide cash compensation (PHP 500 / ~$11 for a 6-8 hour workshop; PHP 100 / ~$2 for financial product enrollment) following near-zero initial take-up.
What to do
Budget and deploy direct participant compensation (such as attendance stipends) when launching field interventions to overcome initial adoption friction and achieve adequate statistical power.
From the source
"Four months into the project, only 36 had participated in our financial education sessions out of the 487 invited. In the same period, only 4 individuals had availed of the BPI savings account following our invitations, while only one person had obtained an ASKI microloan... Starting January 2015, we provided financial incentives to encourage households to take-up the treatments."
Financial Education and Financial Access for Transnational Households: Field Experimental Evidence from the Philippines