The Economics of Attention

Abstract

As Herbert Simon foresaw in the early stages of what has come to be known as the information age, a widespread abundance of information has made limited attention an increasingly pivotal constraint on economic activity, to the degree that attention is now the primary factor of production required by many forms of both labor (e.g., computer programming) and leisure (e.g., social media use). Developing this insight, we summarize what is known about the psychology of attention and review the rapidly expanding literature in economics that deals with attention. We place a particular emphasis on opportunities associated with integrating attention into economic theory, including its potential to provide a unified explanation for many documented violations of the classical model across the domains of risk, time, social, and information preferences. As we point out, however, attention is a productive input into nearly all economic behaviors---such as engaging in search, updating beliefs, and generating consumption utility---and should therefore be added to the list of core resource constraints studied in economics. In particular, we argue that a robust "economics of attention'' will prepare policy makers to grapple with the effects of artificial intelligence and other novel digital technologies more effectively.

Keywords: attention, motivation, behavioral bias, information, learning, education, artificial intelligence, machine learning, future of work

JEL Classification: D83, D90, D91, I00