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Getting to the Top of Mind: How Reminders Increase Saving

  • Dean Karlan

    ()

    (Economics Department, Yale University)

  • Margaret McConnell

    ()

    (Center for Population and Development Studies, Harvard University)

  • Sendhil Mullainathan

    ()

    (Department of Economics, Harvard University)

  • Jonathan Zinman

    ()

    (Department of Economics, Dartmouth College)

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.

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File URL: http://www.econ.yale.edu/growth_pdf/cdp988.pdf
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Paper provided by Economic Growth Center, Yale University in its series Working Papers with number 988.

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Length: 40 pages
Date of creation: Jul 2010
Date of revision:
Handle: RePEc:egc:wpaper:988
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  5. John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2009. "The Importance of Default Options for Retirement Saving Outcomes: Evidence from the United States," NBER Chapters, in: Social Security Policy in a Changing Environment, pages 167-195 National Bureau of Economic Research, Inc.
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  11. Drew Fudenberg & David K. Levine, 2006. "A Dual Self Model of Impulse Control," Harvard Institute of Economic Research Working Papers 2112, Harvard - Institute of Economic Research.
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  13. Nava Ashraf & Dean Karlan & Wesley Yin, 2005. "Deposit Collectors," Working Papers 930, Economic Growth Center, Yale University.
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  16. Raj Chetty & Adam Looney & Kory Kroft, 2009. "Salience and Taxation: Theory and Evidence," American Economic Review, American Economic Association, vol. 99(4), pages 1145-77, September.
  17. Shlomo Benartzi & Richard Thaler, 2004. "Save more tomorrow: Using behavioral economics to increase employee saving," Natural Field Experiments 00337, The Field Experiments Website.
  18. Faruk Gul & Wolfgang Pesendorfer, 2004. "Self-Control and the Theory of Consumption," Econometrica, Econometric Society, vol. 72(1), pages 119-158, 01.
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