ABSTRACT: Using data from an experiment that encouraged 3.1 million bank customers to save, we investigate whether savings nudges have the unintended consequence of additional borrowing in high-interest credit. We first train a machine-learning algorithm to predict individual-level treatment effects and then focus on individuals who have a credit card and who are expected to save the most in response to the nudge. We find a 6.1% increase in savings (208 USD PPP per month) and that individuals increase their savings by spending less instead of borrowing more. In addition, individuals who were carrying credit card debt at baseline also respond to the treatment with an increase in savings of similar magnitude but do not use the new savings to pay off existing debt. Our results have implications for economic theory and policy design.
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