Getting to the top of mind: How reminders increase saving

  • Dean Karlan Dean Karlan
  • Jonathan Zinman Jonathan Zinman
  • Margaret McConnell Margaret McConnell
  • Sendhil Mullainathan Sendhil Mullainathan

We develop and test a simple model of limited attention in intertemporal choice.The model posits that individuals fully attend to consumption in all periods but fail to attend to some future lumpy expenditure opportunities. This asymmetry generates some predictionsthat overlap with models of present-bias. Our model also generates the unique predictions that reminders may increase saving, and that reminders will be more effective when they increase thesalience of a specific expenditure. We find support for these predictions in three field experiments that randomly assign reminders to new savings account holders.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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