A Grant to Every Citizen: Survey Evidence of the Impact of a Direct Government Payment in Israel

38 Pages Posted: 20 Dec 2020 Last revised: 29 Dec 2020

See all articles by Naomi E. Feldman

Naomi E. Feldman

Hebrew University of Jerusalem, Department of Economics

Ori Heffetz

Cornell University - S.C. Johnson Graduate School of Management; The Hebrew University of Jerusalem - Department of Economics and Center for Rationality; National Bureau of Economic Research (NBER)

Date Written: December 28, 2020

Abstract

In early August, 2020, during the COVID-19 pandemic, Israel disbursed one-time, universal grants to its citizens, of $220 per adult and $150 per child. Using survey data, we estimate that 25-45 percent either had already mostly spent or were planning to spend the money by year’s end and 36-52 percent mostly paid down debts. Interestingly, about as many people reported mostly donating the grant or using it to help family or friends as reported saving it (10-18 percent), with donations mostly originating from higher-income respondents. This voluntary rerouting of governmental assistance may help alleviate the trade-off between targeting and simplicity/speed of disbursement.

Keywords: fiscal policy, universal transfers, marginal propensity to spend, MPC, stimulus

JEL Classification: D14, D9, E21, E62, E65, H24, H31

Suggested Citation

Feldman, Naomi E. and Heffetz, Ori, A Grant to Every Citizen: Survey Evidence of the Impact of a Direct Government Payment in Israel (December 28, 2020). Available at SSRN: https://ssrn.com/abstract=3752364 or http://dx.doi.org/10.2139/ssrn.3752364

Naomi E. Feldman (Contact Author)

Hebrew University of Jerusalem, Department of Economics ( email )

Mount Scopus
Jerusalem, Jerusalem 91905
Israel
9190501 (Fax)

Ori Heffetz

Cornell University - S.C. Johnson Graduate School of Management ( email )

324 Sage Hall
Ithaca, NY 14853
United States

The Hebrew University of Jerusalem - Department of Economics and Center for Rationality

Mount Scopus
Jerusalem, Jerusalem 91905
Israel

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/~heffetz

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