We show that household consumption displays excess sensitivity to salient macro-economic news. When the announced local unemployment rate reaches a 12-month maximum, local consumers in that area reduce discretionary spending by 2% relative to consumers in areas with the same macro-economic fundamentals. The consumption of low-income households displays greater excess sensitivity to salience. The decrease in spending is not reversed in subsequent months; instead, negative news persistently reduces future spending for two to four months. Announcements of 12-month unemployment maximums also lead consumers to reduce their credit card repayments by 3.6%.
I study the impact of aggregation of financial information from multiple financial accounts on consumer behavior. First, using transaction level data from an account aggregation company, I test the change in spending behavior of consumers that linked a new account to the app. I find that the total discretionary spending (in old and newly linked accounts) increases for users with a large percentage change in their aggregated income after linking the new account. Discretionary spending decrease with the change in aggregated spending and are not affected by the change in total balance. These results hold for the subset of users that attempted to link a new account, but the new information was successfully pulled by the app only months later due to technical reasons. Second, in a series of randomized surveys, I find that consumers perceive a single amount of monthly income or spending to be larger than the same amount divided into multiple accounts. I find no differences when splitting the total account balance into multiple accounts. Overall, the findings in this paper are consistent with the salience effect of large numbers and anchoring.
We use transaction data from an account aggregation company to study the impact of access to personal financial information from mobile devices on consumer behavior. We study consumers who installed the mobile app after using the app on a PC for several months. We utilize the gradual release of the apps on different devices (iPhone, iPad, and Android) to establish a causal relationship conditional on the adoption of a mobile app. Consistent with rational inattention models, consumers increase their login frequency, especially during retail peak hours. Consistent with costly self-control and reference-dependent utility models, we find that consumers decrease their discretionary spending, and these effects are stronger among lower-income and high-spending-to-income consumers.
In a randomized field experiment, I test if the way in which information is presented influences consumer behavior. Users of an online account aggregation app received a personalized index representing their net worth as a lifetime monthly cash flow. The presentation of the index varied in the framing used to describe the index and in the salience of the comparison between the index and the user's historical spending. Consumers that received a consumption frame (promoting a mental reflection about the affordability of future consumption) and a salient comparison with historical spending decreased their discretionary spending by 15\% relative to other treatments throughout the eight months of the experiment. The effect persisted for an additional eight months after the removal of the experiment content from the app. The sensitivity of consumers' spending to information design presents opportunities for policies aimed at influencing saving rates.