Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees
NBER Working Paper No. 17028
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.
This paper was revised on November 26, 2013
Document Object Identifier (DOI): 10.3386/w17028
Published: Limited and Varying Consumer Attention Evidence from Shocks to the Salience of Bank Overdraft Fees Victor Stango Graduate School of Management, University of California–Davis Jonathan Zinman Rev. Financ. Stud. (2014) doi: 10.1093/rfs/hhu008
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