NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees

Victor Stango, Jonathan Zinman

NBER Working Paper No. 17028
Issued in May 2011
NBER Program(s):   LE

We explore dynamics of limited attention in the $35 billion market for checking overdrafts, using survey content as shocks to the salience of overdraft fees. Conditional on selection into surveys, individuals who face overdraft-related questions are less likely to incur a fee in the survey month. Taking multiple overdraft surveys builds a "stock" of attention that reduces overdrafts for up to two years. The effects are significant among consumers with lower education and financial literacy. Individuals avoid overdrafts by making fewer low-balance debit transactions and cancelling automatic recurring withdrawals. The results raise new questions about consumer financial protection policy.

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This paper was revised on November 26, 2013

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Document Object Identifier (DOI): 10.3386/w17028

Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees, forthcoming, Review of Financial Studies, with Victor Stango

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