Stimulus payments and private transfers

Publication type

Research Paper

Series Number

22/10

Series

IFS Working Paper Series

Authors

Publication date

February 16, 2022

Summary:

Private transfers can affect the spending response to stimulus payments, as those receiving income windfalls may transfer resources to other households in greater financial need. We report a survey experiment where individuals were asked how they would respond to a £500 payment, with a randomly selected subset of individuals explicitly told that all households would receive the same payments (a ‘public windfall’ scenario). This additional information increased MPCs by 11%. Reported transfer intentions in response to windfalls suggest that public payments crowd out private transfers, partly accounting for the higher MPCs in the public windfall case.

DOI

https://doi.org/10.1920/wp.ifs.2022.1022

Subjects

Link

https://ifs.org.uk/publications/15949

Notes

PLEASE CITE AS: Crossley, T.F., Fisher, P., Levell, P., and Low, H. (2023) 'Stimulus payments and private transfers', Economics Letters, 222:110944. https://doi.org/10.1016/j.econlet.2022.110944

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