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Testing the Effectiveness of Consumer Financial Disclosure: Experimental Evidence from Savings Accounts

Paul D. Adams, Stefan Hunt, Christopher Palmer, Redis Zaliauskas

NBER Working Paper No. 25718
Issued in March 2019, Revised in May 2020
NBER Program(s):Economics of Aging, Corporate Finance, Industrial Organization, Law and Economics, Monetary Economics, Public Economics

While popular with policymakers, most evidence on consumer financial disclosure’s effectiveness studies borrowing decisions (where optimality is unclear) or lab experiments (where attention is not scarce). We provide field evidence from randomized-controlled trials with 124,000 savings-account holders at five UK depositories. Treated consumers were disclosed varying degrees of salient information about alternative products, including one with their current provider strictly dominating their current product. Despite switching taking roughly 15 minutes and the moderate average potential gains ($190/year), switching is rare across disclosure designs and depositors. We find pessimistic beliefs drive disclosure inattention and limit disclosure’s effectiveness, helping explain deposit stickiness.

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Document Object Identifier (DOI): 10.3386/w25718

 
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