"Many public policies focus on encouraging people to save more than they would otherwise. Yet for many households, the wealth-maximizing strategy is to pay down debt, not accumulate assets. Here we designed and tested a product that focused on reducing expensive debt for households. The product, named Borrow Less Tomorrow (BoLT), is modeled loosely on Save More Tomorrow™. BoLT is designed to counter several behavioral tendencies that can lead to high leverage by providing borrowers with information, reminders, and a social commitment (peer support) to speed up repayment of expensive debt. Here we present results from our initial marketing, administration, and randomized evaluation of BoLT in partnership with the Community Action Project of Tulsa. Preliminary results, on a sample of 505 clients with a credit card or auto loan who we approached while waiting for free tax preparation services, suggest that BoLT is a viable product innovation. We find strong demand for BoLT, with a take-up rate approaching 40%. One-half of those taking-up BoLT also take up peer support when it is offered. Post- take-up, we are monitoring BoLT plan compliance using credit reports. Estimated effects on debt loads held 6-months after the random assignment to a BoLT offer or a control group are consistent with plausibly-sized reductions: all of our econometric specifications point to a 3 percentage point (8-14%) increase in the likelihood of 5% or 10% reduction in credit card or auto loan debt, although none of the p-values on these estimates are less than 0.097. We are continuing the study to a second year to increase the sample size and hence the precision of these estimates."
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