Review of Financial Studies Vol. 27 No. 4 2014
Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees
Abstract
We 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. Individuals avoid overdrafts by making fewer low-balance debit transactions and cancelling automatic recurring withdrawals. The results raise new questions about consumer financial protection policy.
- DOI
- 10.1093/rfs/hhu008
- Volume
- 27
- Issue
- 4
- Pages
- 990-1030
- Language
- en
- Sources
- openalex crossref