TY  - JOUR
AU  - Ameriks,John
AU  - Caplin,Andrew
AU  - Leahy,John
TI  - The Absent-Minded Consumer
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10216
PY  - 2004
Y2  - January 2004
UR  - http://www.nber.org/papers/w10216
L1  - http://www.nber.org/papers/w10216.pdf
N1  - Author contact info:
John Ameriks
John Ameriks
The Vanguard Group, Inc.
PO Box 2600, MS V36
Valley Forge PA 19482
Tel: 610-503-5676
Fax: 610-503-5690
E-Mail: john_ameriks@vanguard.com

Andrew Caplin
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/998-8950
Fax: 212/995-3932
E-Mail: andrew.caplin@nyu.edu

John V. Leahy
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/992-9770
E-Mail: john.leahy@nyu.edu
AB  - We present evidence that many households have only a vague notion of what they are spending on various consumption items. We then develop a life-cycle model that captures this  absent-mindedness'. The model generates precautionary spending, whereby absent-minded agents tend to consume more than attentive ones. The model also predicts fluctuations over time in the level of attention, and thereby sheds new light on the sharp reduction in consumption both at retirement, and in cyclical downturns. Finally, we find patterns of attention in the data that are consistent with those predicted by the model.
ER  -