Reported Preference vs. Revealed Preference: Evidence from the Propensity to Spend Tax Rebates

41 Pages Posted: 14 Jul 2017 Last revised: 28 Sep 2017

See all articles by Jonathan A. Parker

Jonathan A. Parker

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Nicholas S. Souleles

University of Pennsylvania - Finance Department; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: June 30, 2017

Abstract

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

Parker, Jonathan A. and Souleles, Nicholas S., Reported Preference vs. Revealed Preference: Evidence from the Propensity to Spend Tax Rebates (June 30, 2017). Available at SSRN: https://ssrn.com/abstract=2998880 or http://dx.doi.org/10.2139/ssrn.2998880

Jonathan A. Parker (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA
United States
617-253-7218 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Nicholas S. Souleles

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States
215-898-9466 (Phone)
215-898-6200 (Fax)

HOME PAGE: http://finance.wharton.upenn.edu/~souleles

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
46
Abstract Views
505
PlumX Metrics