Selected Example Projects

Can Prize-Linked Incentives Promote Debt Reduction?

Prior research suggests that we tend to overweight small probability events and that they have a disproportionately large impact on our behavior.  Case in point: widespread interest in playing the lottery.  Can lottery style incentives also help promote positive financial behavior?  While evidence from the lab and correlational evidence from the field suggests that prize-linked incentives are attractive to consumers and may be motivating in inducing savings, there is little field evidence regarding whether they cause savings behavior change and essentially no evidence on whether they can help improve debt repayment behavior.

BEST researchers are partnering with a nationwide non-profit credit counseling agency to conduct the first large randomized controlled field trial in the US examining the efficacy of prize-linked incentives in promoting positive financial behavior.  Randomly selected participants in the partner’s debt management plan (DMP) are receiving access to an intervention that links on-time debt repayment with a small chance of debt forgiveness.  We are examining the effects of the incentives on timely debt repayment, overall debt reduction, delinquency, and bankruptcy and whether the incentives increase programmatic revenue through increased retention.