How Did U.S. Consumers Use Their Stimulus Payments?

38 Pages Posted: 17 Aug 2020

See all articles by Olivier Coibion

Olivier Coibion

University of Texas at Austin

Yuriy Gorodnichenko

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Michael Weber

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

Multiple version iconThere are 5 versions of this paper

Date Written: August 14, 2020

Abstract

Using a large-scale survey of U.S. consumers, we study how the large one-time transfers to individuals from the CARES Act affected their consumption, saving and labor-supply decisions. Most respondents report that they primarily saved or paid down debts with their transfers, with only about 15 percent reporting that they mostly spent it. When providing a detailed breakdown of how they used their checks, individuals report having spent or planning to spend only around 40 percent of the total transfer on average. This relatively low rate of spending out of a one-time transfer is higher for those facing liquidity constraints, who are out of the labor force, who live in larger households, who are less educated and those who received smaller amounts. We find no meaningful effect on labor-supply decisions from these transfer payments, except for twenty percent of the unemployed who report that the stimulus payment made them search harder for a job.

Keywords: Expectations, surveys, marginal propensity to consume, labor supply, fiscal policy, COVID-19

JEL Classification: E3, E4, E5

Suggested Citation

Coibion, Olivier and Gorodnichenko, Yuriy and Weber, Michael, How Did U.S. Consumers Use Their Stimulus Payments? (August 14, 2020). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-109, Available at SSRN: https://ssrn.com/abstract=3675543 or http://dx.doi.org/10.2139/ssrn.3675543

Olivier Coibion

University of Texas at Austin ( email )

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Austin, TX 78712
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Yuriy Gorodnichenko

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

HOME PAGE: http://www.econ.berkeley.edu/~ygorodni/index.htm

National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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Michael Weber (Contact Author)

University of Chicago - Finance ( email )

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United States

National Bureau of Economic Research (NBER)

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