Mental Accounting and Cash Transfers: Experimental Evidence from a Humanitarian Setting

We conducted a field experiment to test whether a light-touch behavioral intervention inspired by mental accounting can help refugee households in Uganda accumulate capital and increase income. Over seven months, households received monthly unconditional cash transfers. Treatment households could allocate their transfers across four labeled envelopes—Education, Health, Investments, Other—while control households received the same amount in a single, unlabeled envelope. The intervention encouraged budgeting and served as a soft commitment to limit reallocation away from productive uses. Take-up was high: 93% of treatment households opted in, and 37% still used the envelopes a year later. One year post-program, treatment households had invested 26% more in income-generating activities, especially lumpy assets, resulting in 18% higher income and 22% more savings. Households invited to actively choose their allocations (rather than receiving a suggested allocation) exhibited stronger commitment and saw greater gains in income and savings.