Side Effects of Nudging: Evidence from a Randomized Intervention in the Credit Card Market Academic Article uri icon

abstract

  • Abstract This paper studies the direct and indirect effects of nudging, by means of a field experiment with a financial management platform in Brazil. Reminders for upcoming credit card payments reduced credit card late-payment fees by 14%, but increased overdraft fees in checking accounts by 9%. The unintended effect is concentrated in users with a history of overdraft use. These users experienced a net increase of 5% in total fees, while the rest experienced savings of 15%. The results provide clear insights for nudge design: like any policy action, nudges can have side effects, and one size may not fit all.

published proceedings

  • Review of Financial Studies

altmetric score

  • 10

author list (cited authors)

  • Medina, P. C.

citation count

  • 23

editor list (cited editors)

  • Jiang, W.

publication date

  • April 2021