MENTAL ACCOUNTS: Making Saving Money Easier, Using Behavioral Data

Julia Marín Morales and Javier Martinez Revilla

This was a thesis written for the International Masters in Entrepreneurship Microfinance at Universidad Autónoma de Madrid, under the supervision of the Academic Director, Dr Maricruz Lacalle Calderón and Dr Federico Estrada (Fundación Capital).  It is a valuable application of new behavioural economics.  Setting out to understand how best to promote the accumulation of financial assets among the poor, the thesis explores the barriers created by behaviours that undermine positive attitudes to savings and deposits, and the role of different commitment mechanisms that individuals use to condition their own behavioural patterns. It examines to what degree mental accounting can improve the propensity to save among the poor, and the different ways of calling a savings account in the formal financial system can help (to propose something specific such as a savings target). The theoretical framework is applied to the case of the Mujeres Ahorradoras programme in El Salvador, a financial education programme spearheaded by Fundación Capital to help women savers. A proposal is made to evaluate the relationship between financial education and mental accounting.