Testing the Effectiveness of Consumer Financial Disclosure: Experimental Evidence from Savings Accounts

47 Pages Posted: 1 Apr 2019 Last revised: 10 Apr 2022

See all articles by Stefan Hunt

Stefan Hunt

Financial Conduct Authority

Christopher Palmer

MIT Sloan; National Bureau of Economic Research (NBER)

Redis Zaliauskas

Lloyds Banking Group

Date Written: March 2019

Abstract

While popular with policymakers, most evidence on consumer financial disclosure’s effectiveness studies borrowing decisions (where optimality is unclear) or lab experiments (where attention is not scarce). We provide field evidence from randomized-controlled trials with 124,000 savings-account holders at five UK depositories. Treated consumers were disclosed varying degrees of salient information about alternative products, including one with their current provider strictly dominating their current product. Despite switching taking roughly 15 minutes and the moderate average potential gains ($190/year), switching is rare across disclosure designs and depositors. We find pessimistic beliefs drive disclosure inattention and limit disclosure’s effectiveness, helping explain deposit stickiness.

Suggested Citation

Hunt, Stefan and Palmer, Christopher and Zaliauskas, Redis, Testing the Effectiveness of Consumer Financial Disclosure: Experimental Evidence from Savings Accounts (March 2019). NBER Working Paper No. w25718, Available at SSRN: https://ssrn.com/abstract=3363454

Stefan Hunt

Financial Conduct Authority ( email )

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Christopher Palmer

MIT Sloan ( email )

77 Massachusetts Avenue
Cambridge, MA 02139-4307
United States

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

Redis Zaliauskas

Lloyds Banking Group ( email )

10 Gresham Street
London, EC2V 7AE
United Kingdom

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