Reported Preference vs. Revealed Preference: Evidence from the Propensity to Spend Tax Rebates
41 Pages Posted: 14 Jul 2017 Last revised: 28 Sep 2017
Date Written: June 30, 2017
We evaluate the consistency of two methods for estimating the effect of an economic policy: i) surveying people to report the change in their behavior caused by the policy, ii) inferring this change using (reported) actual behavior and differences in treatment across people. Both methods have been widely used to measure propensities to spend. Using Federal stimulus payments disbursed quasi-randomly over time in 2008, we find greater revealed-preference estimates of spending by households reporting greater spending and the two methods produce similar estimates of average spending. But, counterfactually, reported preferences estimates are not higher for households with lower liquidity.
Keywords: Revealed preference, survey methods, treatment effects, consumption, marginal propensity to consume, fiscal policy
JEL Classification: B40, C42, C21, H31, D14, E21, E62
Suggested Citation: Suggested Citation