Assenza, Tiziana, Cardaci, Alberto and Haliassos, Michael (2023) Consumption and Account Balances in Crises: Have We Neglected Cognitive Load? TSE Working Paper, n. 24-1499, Toulouse

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The complexities of geopolitical events, financial and fiscal crises, and the ebb and flow of personal life circumstances can weigh heavily on individuals’ minds as they make critical economic decisions. To investigate the impact of cognitive load on such decisions, we conducted an incentivized online experiment involving a representative sample of 2,000 French households. The results revealed that ex-posure to a taxing and persistent cognitive load significantly reduced consumption, particularly for individuals under the threat of furlough, while simultaneously in-creasing their account balances, particularly for those not facing such employment uncertainty. These effects were not driven by supply constraints or a worsening of credit constraints. Instead, cognitive load primarily affected the optimality of the chosen policy rules and impaired the ability of the standard economic model to accurately predict consumption patterns, although this effect was less pronounced among college-educated subjects.

Item Type: Monograph (Working Paper)
Language: English
Date: December 2023
Place of Publication: Toulouse
Uncontrolled Keywords: consumption, saving, borrowing, cognitive load, online experiments, RCT, crises, furlough
JEL Classification: C9 - Design of Experiments
D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse Capitole
Site: UT1
Date Deposited: 25 Jan 2024 14:11
Last Modified: 25 Jan 2024 14:11
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