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Getting to the Top of Mind: How Reminders Increase Saving

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  • Karlan, Dean S.
  • McConnell, Margaret
  • Mullainathan, Sendhil
  • Zinman, Jonathan

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 predictions that 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.

Suggested Citation

  • Karlan, Dean S. & McConnell, Margaret & Mullainathan, Sendhil & Zinman, Jonathan, 2010. "Getting to the Top of Mind: How Reminders Increase Saving," Center Discussion Papers 92001, Yale University, Economic Growth Center.
  • Handle: RePEc:ags:yaleeg:92001
    DOI: 10.22004/ag.econ.92001
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    More about this item

    Keywords

    Consumer/Household Economics; Financial Economics;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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