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

Victor Stango; Jonathan Zinman

doi:10.1093/rfs/hhu008

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

Victor Stango¹; Jonathan Zinman²

¹ University of California, Davis · ² Dartmouth College

Review of Financial Studies 2014

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 (4)
Pages: 990-1030
Language: en
Export: BibTeX
Sources: openalex crossref