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

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