…deciding what to consume today requires a consideration of all future expenditure opportunities; e.g., how much in school fees or taxes are coming due? What novel consumption opportunities will arise?
In our model, individuals overlook some of these future expenditure opportunities. We are motivated in part by the “planning fallacy”: people systematically underestimate the time required to complete tasks …But prodding people to list speci c sub-components of tasks improves the accuracy of time-completion estimates.
…We test our model’s predictions about reminders in field experiments with three di fferent banks in Bolivia, Peru, and the Philippines. In each experiment, individuals opened a bank savings account which included varying degrees of incentives or commitment features designed to encourage individuals to reach a savings goal. Some individuals were randomly assigned to receive a monthly reminder via text message or letter, while a control group received no reminder.
Reminders increased the likelihood of reaching a savings goal by 3% and the total amount saved in the reminding bank by 6%.
A new paper from Dean Karlan, Margaret McConnell, Sendhil Mullainathan and Jonathan Zinman.
There’s a lot cognitively that could be going on here besides pure attention. Not that we’re particularly good at isolating these traits, but I’d be curious to see pre-intervention cognitive tests and whether treatment impacts are greatest among those with the greatest attention deficits or other cognitive traits.
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It’s amazing that we ever survived to create a civilization, given how irrational and incapable we are.
Or maybe it’s the model that needs some updating. Tough call.