Working Paper: CEPR ID: DP7907
Authors: Dean S. Karlan; Margaret McConnell; Sendhil Mullainathan; Jonathan Zinman
Abstract: We develop and test a simple model of limited attention in intertemporal choice. The model posits that individuals fully attend to consumption in all periods but fail to attend to some future lumpy expenditure opportunities. This asymmetry generates some predictionsthat overlap with models of present-bias. Our model also generates the unique predictions that reminders may increase saving, and that reminders will be more effective when they increase the salience of a specific expenditure. We find support for these predictions in three field experiments that randomly assign reminders to new savings account holders.
Keywords: attention; intertemporal consumer choice; savings
JEL Codes: D91; E21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reminders (Y60) | Saving (E21) |
| Reminders (highlighting future expenditures) (H68) | Saving (E21) |
| Reminders (Y60) | Likelihood of achieving savings goals (D14) |