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Limited and varying consumer attention: evidence from shocks to the salience of bank overdraft fees

  • Victor Stango
  • Jonathan Zinman

The authors 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. Consumers avoid overdrafts not by increasing balances but by making fewer debit transactions and cancelling automatic recurring withdrawals. The results raise new questions about consumer financial protection policy.

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Paper provided by Federal Reserve Bank of Philadelphia in its series Working Papers with number 11-17.

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Date of creation: 2011
Date of revision:
Handle: RePEc:fip:fedpwp:11-17
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  1. Kolko, Jed, 2010. "A new measure of US residential broadband availability," Telecommunications Policy, Elsevier, vol. 34(3), pages 132-143, April.
  2. Austan Goolsbee, 1998. "In a World Without Borders: The Impact of Taxes on Internet Commerce," NBER Working Papers 6863, National Bureau of Economic Research, Inc.
  3. Eliaz, Kfir & Spiegler, Ran, 2006. "Consideration Sets and Competitive Marketing," MPRA Paper 21434, University Library of Munich, Germany, revised 03 Sep 2009.
  4. Justin R. Sydnor & Devin G. Pope & Nicola Lacetera, 2011. "Heuristic Thinking and Limited Attention in the Car Market," 2011 Meeting Papers 105, Society for Economic Dynamics.
  5. Sumit Agarwal & John C Driscoll & Xavier Gabaix & David Laibson, 2008. "Learning in the Credit Card Market," Levine's Working Paper Archive 122247000000002028, David K. Levine.
  6. Bertrand, Marianne & Karlan, Dean & Mullainathan, Sendhil & Shafir, Eldar & Zinman, Jonathan, 2009. "What's Advertising Content Worth? Evidence from a Consumer Credit Marketing Field Experiment," Working Papers 58, Yale University, Department of Economics.
  7. Victor Stango & Jonathan Zinman, 2009. "What Do Consumers Really Pay on Their Checking and Credit Card Accounts? Explicit, Implicit, and Avoidable Costs," American Economic Review, American Economic Association, vol. 99(2), pages 424-29, May.
  8. Jonathan Zinman, 2009. "Where Is The Missing Credit Card Debt? Clues And Implications," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(2), pages 249-265, 06.
  9. Jeffrey T. Prince, 2008. "Repeat Purchase amid Rapid Quality Improvement: Structural Estimation of Demand for Personal Computers," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(1), pages 1-33, 03.
  10. Xavier Gabaix & David Laibson, 2006. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 505-540, May.
  11. 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.
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