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

Area of Science:

• Behavioral Economics
• Family Economics
• Decision Science

Background:

• Present bias, the tendency to overvalue immediate rewards, leads to under-saving and financial hardship.
• Marriage is often assumed to facilitate long-term financial planning, potentially acting as a commitment device against present bias.

Purpose of the Study:

• To investigate if married couples in Vietnam use each other as a savings commitment device to mitigate present bias.
• To analyze how present bias affects joint financial decision-making and resource allocation within marriage.

Main Methods:

• Utilized a combination of experimental and survey data from Vietnam.
• Compared decision-making of individuals alone versus jointly with their spouses.
• Analyzed financial behaviors, resource management, and income transfers within married couples.

Main Results:

• Individuals exhibit less present bias when making decisions jointly with their spouses compared to making decisions alone.
• Present-biased individuals manage household resources more frequently and transfer a smaller proportion of their earnings to their spouses.
• Present-biased individuals receive more financial resources from their spouses' incomes, suggesting marriage can exacerbate under-saving.

Conclusions:

• Marriage does not consistently function as a savings commitment device against present bias; it can sometimes worsen the problem.
• Non-present-biased spouses attempt to mitigate present bias by controlling allowances, but present-biased spouses may conceal funds.
• External savings commitment devices are crucial for individuals to protect their savings from present-biased spouses.