Stimulus payments and private transfers

Publication type

Understanding Society Working Paper Series

Series Number

2022-02

Series

Understanding Society Working Paper Series

Authors

Publication date

March 2, 2022

Abstract:

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.

Subjects

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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