Understanding How Mental Accounting Impacts Women’s Savings and Economic Empowerment


Present research indicates that access to digital financial services (DFS) leads to behavioral changes in financial management among women, ultimately leading to women’s economic empowerment (WEE). The inherent technological features of DFS help reduce the mental burden of accounting for expenditures, such as separating savings and emergency expenses from regular spending. The existing literature also suggests that adoption of DFS influences women, particularly married women, to both save more and to rely more heavily on their savings to cope with income shocks. These studies argue that the main mechanisms behind this impact are the reduction in mental accounting costs and increase in intra-household bargaining power. However, the channels through which mental accounting affects savings are not fully understood. The study tests the extent to which mental accounting allows women to save through increases in self-control, goal-setting behaviors, and bargaining power. Moreover, the study aims to bridge existing gaps in the literature by providing robust evidence that can subsequently inform digital savings product design.


The pilot study tests the impact of a digital mental accounting intervention on women’s savings and explores possible linkages between the two. The study theorizes that this intervention will lead to increases in women’s digital savings, especially for women with low baseline levels of self-control, will make women’s goals more salient, and will increase women’s intra and inter-household bargaining power. Participants will be provided with a digital savings account within a mobile app (Spark) which will be partitioned and labeled by participants themselves to make mental accounting more salient and trackable. The study aims to select a target group of women aged 18 to 25 who have exclusive use of a smartphone, an existing bank account, and monthly incomes between 8,000 and 30,000 INR. A sample of 400 participants will be divided into a control and a treatment group. One group will receive a Spark account with a generic unlabeled savings account, and the other group will receive accounts with partitions and labels such as children’s expenses and health expenses. In addition to core outcomes including total savings and consumption, the study will collect data on mechanism outcomes such as salience of goals, bargaining power, kin transfers, and kin engagement.

Proposed impact

Understanding the general effect of mental accounting on women’s savings and their financial management behavior has broad implications. First, findings will be relevant for researchers studying behavioral influences of DFS on WEE. Second, the evidence generated has the potential to influence the design of DFS interventions that are more effective in targeting and empowering women. Finally, findings have the potential to advance gender equality by shaping public policy.

Photo credit: Pau Casals on Unsplash


Associated Institute: Busara Center for Behavioral Economics

Associated Investigators: Jeremy Shapiro, Busara Center for Behavioral Economics; Samantha Horn, Carnegie Mellon University; Aditya Jagati, Busara Center; Nicholas Owsley, Busara

Country: India

Implementation Partners: Busara Center for Behavioral Economics; Dvara Money

WEE-DiFine thematic areas: behavioral influence; velocity of transfers; bargaining power; ability to enact preferences; household decision-making