Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees

46 Pages Posted: 23 Apr 2011 Last revised: 21 May 2011

See all articles by Victor Stango

Victor Stango

UC Davis Graduate School of Management

Jonathan Zinman

Dartmouth College; Innovations for Poverty Action; Jameel Poverty Action Lab; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: April 1, 2011

Abstract

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.

Keywords: household finance, attention, overdraft fees, intertemporal choice

JEL Classification: D14, D18, G13, G21

Suggested Citation

Stango, Victor and Zinman, Jonathan, Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees (April 1, 2011). FRB of Philadelphia Working Paper No. 11-17. Available at SSRN: https://ssrn.com/abstract=1817916 or http://dx.doi.org/10.2139/ssrn.1817916

Victor Stango (Contact Author)

UC Davis Graduate School of Management ( email )

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Davis, CA 95616
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Jonathan Zinman

Dartmouth College ( email )

Hanover, NH 03755
United States
603-646-0075 (Phone)

HOME PAGE: http://https://sites.dartmouth.edu/jzinman/

Innovations for Poverty Action

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Jameel Poverty Action Lab

E60-246
77 Massachusetts Avenue
Cambridge, MA 02139
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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