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Getting to the Top of Mind: How Reminders Increase Saving

Author

Listed:
  • 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)

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

  • Dean Karlan & Margaret McConnell & Sendhil Mullainathan & Jonathan Zinman, 2010. "Getting to the Top of Mind: How Reminders Increase Saving," Working Papers 988, Economic Growth Center, Yale University.
  • Handle: RePEc:egc:wpaper:988
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    File URL: http://www.econ.yale.edu/growth_pdf/cdp988.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    intertemporal consumer choice; savings; attention;
    All these keywords.

    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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