Research Article: Does marriage work as a savings commitment device? Experimental evidence from Vietnam

Date Published: June 19, 2019

Publisher: Public Library of Science

Author(s): Hisaki Kono, Tomomi Tanaka, Pablo Brañas-Garza.


Present bias, or the overvaluation of an immediate payoff, causes under-saving and financial difficulty. We investigate whether married couples utilize their spouses as a savings commitment device to alleviate the present bias problem using experimental and survey data in Vietnam. We find that individuals are less present biased when making joint decisions with their spouses than they are when making decisions alone. However, present-biased individuals turn over a smaller ratio of their earnings to their spouses and are more likely to manage household resources than time-consistent individuals are. Present-biased individuals also receive larger amounts of money from their spouses’ incomes, indicating that marriage not only fails to function as a savings commitment device but also exacerbates the problem. Married couples whose joint decisions are not present biased try to alleviate this problem by allocating smaller allowances to present-biased spouses, but the present-biased spouses conceal money to counteract this strategy. Our study indicates the importance of external savings commitment devices in helping people protect money from their present-biased spouses.

Partial Text

Empirical evidence suggests that people do not save as much as they think they should [1, 2]. Several studies have identified present bias as a major reason for under-saving [3–5]. Present-biased individuals place a particularly high value on immediate consumption and often spend their earnings immediately without saving much for the future [6].

We examine whether marriage works as a savings commitment device. Although our experimental results suggest the possibility that joint decision-making may alleviate the present bias problem, actual household resource allocations exhibit the opposite pattern. PB individuals turn over fewer earnings to their spouses and receive more from their spouses. PB individuals are more likely to keep cash within households. These patterns hold irrespective of whether or not a couple’s joint decision exhibits present bias. Our results suggest that marriage not only fails to function as a savings commitment device but also exacerbates the present bias problem by providing more resources for PB individuals to consume. Households in which the joint decision is not PB actually allocate smaller monthly allowances to PB spouses; however, these individuals undo this strategy by concealing money. We also find that women suffer more from their PB husbands and that they are more likely to use ROSCAs.