View metadata

dc.titleConsumers' Attention to Monetary Policy: The Importance of Having “Skin in the Game"
dc.contributor.authorHajdini, Ina
dc.contributor.authorKnotek II, Edward S.
dc.contributor.authorMitchell, James
dc.contributor.authorPedemonte, Mathieu
dc.contributor.authorShiroff, Taylor
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageUnited States
dc.date.available2026-10-08T00:10:00
dc.date.issue2026-10-08T00:10:00
dc.description.abstractUsing a five-year survey of over 170,000 US consumers, we provide a novel direct measure of attention to monetary policy and show that the data strongly support the predictions of a rational inattention model. First, attention is incentive-driven: consumers with “skin in the game” those planning major purchases like homes or cars are significantly more attentive to monetary policy news. Second, attention varies systematically with interest rate volatility and news supply, exhibiting cyclical patterns around FOMC meetings. Third, marginal effects of volatility and news supply decline with “skin in the game,” implying external factors primarily affect low-skin-in-the-game consumers. These findings imply that, when communication is costly and attention is endogenous, optimal central bank communications in our model target consumers who bear the largest welfare losses from information frictions. This targeted communication approach increases aggregate attention to monetary policy, leading to an amplified response of consumption to interest rate changes is endogenous, central banks should target communication efforts toward consumers who bear the largest welfare losses from information frictions. This targeted communication approach increases aggregate attention to monetary policy, leading to an amplified response of consumption to interest rate changes.
dc.format.extent74
dc.identifier.doihttp://dx.doi.org/10.18235/0014555
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Consumers-Attention-to-Monetary-Policy-The-Importance-of-Having-“Skin-in-the-Game.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectMonetary Policy
dc.subjectDebtor Finance
dc.subjectDemographics
dc.subjectSmall Business
dc.subjectEconomy
dc.subjectInflation Targeting
dc.subjectEducation
dc.subjectFinance
dc.subject.jelcodeD80 - Information, Knowledge, and Uncertainty: General
dc.subject.jelcodeE50 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
dc.subject.keywordsMonetary policy;rational inattention;communication
dc.typeWorking Papers
idb.identifier.pubnumberIDB-WP-01829
idb.operationRG-K1098
Return to Publication