The Absent-Minded Consumer

John Ameriks (), Andrew Caplin () and John Leahy ()

No 10216, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We present evidence that many households have only a vague notion of what they are spending on various consumption items. We then develop a life-cycle model that captures this absent-mindedness'. The model generates precautionary spending, whereby absent-minded agents tend to consume more than attentive ones. The model also predicts fluctuations over time in the level of attention, and thereby sheds new light on the sharp reduction in consumption both at retirement, and in cyclical downturns. Finally, we find patterns of attention in the data that are consistent with those predicted by the model.

JEL-codes: D9 E2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-dge, nep-mac and nep-mic
Date: 2004-01
Note: EFG
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Working Paper: The Absentminded Consumer (2004)
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