#864 2006 · Green Bank of Caraga (product designed with Giné, Karlan & Zinman) · Rural banking / public health
A Philippine bank held a smoker's own money hostage until a urine test proved they'd quit
the problem
72% of smokers wanted to quit someday; only 18% wanted to quit now — and pamphlets don't move the gap.
background
In mid-2000s Mindanao nearly three in ten Filipino adults smoked, and the smokers in the study spent around 100 pesos a week on cigarettes — close to 15 percent of a month's income. Most wanted out: 72 percent said they hoped to quit someday, and 45 percent had tried within the past year. What the region offered them was information — pamphlets on smoking's dangers and tips for quitting, which alone moved almost nobody.
Rural banks sold savings accounts, not behaviour change, and nothing in the local landscape let a smoker put a price on their own resolution. Researchers Xavier Giné, Dean Karlan and Jonathan Zinman, working with Innovations for Poverty Action and the Green Bank of Caraga in Agusan del Norte, suspected the missing ingredient was not motivation but commitment — a way for the person who wanted to quit to bind the person who, in six months, would want a cigarette.
what everyone would do
The standard toolkit is persuasion and information — pamphlets, warnings, counselling — aimed at convincing smokers they should quit, which fails here because 72 percent were already convinced. Price levers like tobacco taxes belong to governments, not a rural bank, and nicotine substitutes cost money smokers are reluctant to spend on quitting. Every available answer spoke to the smoker's better judgment, and better judgment is exactly what loses at the moment of craving.
what they saw
Every smoker contained two customers: 72 percent wanted to quit someday, only 18 percent wanted to quit now. CARES was a contract between the two — the someday-self stakes real money on it, and a urine test decides.
the move
CARES — Committed Action to Reduce and End Smoking — was a voluntary savings account a smoker opened with a self-chosen deposit (50 pesos minimum, about a dollar), encouraged to top up with the money they would otherwise have spent on cigarettes. Six months later a urine test checked for nicotine and cotinine: pass, and every peso came back; fail, and the balance was forfeited to charity.
why it works
The deposit turns an abstract resolution into a concrete, owned loss: the money sits in an account in the smoker's own name, so every craving now has a price — give in, and a balance they can name goes to charity. Loss aversion does the work willpower couldn't. The urine test closes the self-report loophole; nobody can negotiate with cotinine. Paying the forfeit to charity rather than the bank keeps the penalty honest, because the bank earns nothing from failure. And passers get everything back, so the quitter loses nothing but the habit — which is why abstinence was still higher in surprise tests a year later: the six-month stake carried people past the worst until the habit itself broke.
the payoff
11% signed up; signers were 3 points likelier to be clean at six months — and still cleaner at surprise tests a year later.
where it breaks
It recruits only the self-selected — 11 percent took it up — so it cannot move a population, and it needs clients with spare cash: the poorest smokers cannot lock money away. The test must be one the client believes and cannot game, and the forfeit destination must feel legitimate; route the money to the bank instead of charity and enrolment collapses. The stake has to sit between the habit's pull and the client's means — too small and the craving pays it without noticing, too large and nobody signs.
what came after
Published in the American Economic Journal: Applied Economics in 2010, CARES became one of the field's cleanest demonstrations that a self-funded commitment contract can produce lasting change — the headline was the 12-month surprise tests: the stake ended, the abstinence didn't. The authors went on to run larger commitment-contract trials (Commit to Quit), and one of them later co-founded StickK, which sells exactly this contract — money in escrow against verifiable proof — to the general public.
references
- [1]Put Your Money Where Your Butt Is: A Commitment Contract for Smoking CessationAmerican Economic Journal: Applied Economics, 2010aeaweb.org
- [2]CARES Commitment Savings for Smoking Cessation in the PhilippinesAbdul Latif Jameel Poverty Action Lab (J-PAL), 2010povertyactionlab.org