Getting to the Top of the Mind: How Reminders Increase Saving

Margaret McConnell
25 March 2012

Abstract. We study how limited attention may distort intertemporal choice. We develop a simple model in which individuals fail to attend to some future lumpy expenditure opportunities. This can generate over-consumption and under-savings that resembles behavior in models with costly self-control. Limited attention models make a distinct prediction that reminders may increase saving. Our particular model also suggests that reminders will be more e ective when they increase the salience of a speci c future expenditure. We conduct three eld experiments that provide some support for these predictions. New savings account holders randomly assigned to receive reminders to save deposit more into their accounts. Reminders focused on speci c future expenditures are especially e ffective.

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