Income Timing, Temptation and Expenditures: A Field Experiment in Malawi
This reports on research results from an experiment in Malawi that varied the timing of workers' income receipt in two ways. First, payments were made either in weekly installments or as a monthly lump sum, in order to vary the extent to which workers had to save up to make pro table investments. Second, payments at a local market were made either on the weekend market day (Saturday) or the day before the market day (Friday), in order to vary the degree of temptation workers faced when receiving payments. The report provides novel evidence that the frequency of payments matters for workers' ability to benefit from high-return investment opportunities. Workers in the monthly group have more cash left in the week after the last payday when the lump sum payment was made.