Anticipation and Consumption

134 Pages Posted: 23 Feb 2021 Last revised: 1 Dec 2022

See all articles by Neil Thakral

Neil Thakral

Brown University - Department of Economics

Linh Tô

Boston University - Department of Economics

Date Written: November 1, 2022


Cash transfer payments are an increasingly widespread policy tool in developed and developing countries, used for both short-term objectives such as boosting consumer spending and long-term objectives such as poverty alleviation. This paper proposes that the marginal propensity to consume out of a windfall depends on a new state variable, the time horizon over which households anticipate receiving a payment. We test this in three different settings arising from a systematic survey of the literature: a natural experiment provided by the randomized disbursement dates of the 2008 U.S. fiscal stimulus payments, and randomized controlled trials on unconditional cash transfers in Kenya and Malawi. Our data show evidence of excess anticipation-dependence: Consumption consistently responds more strongly to the receipt of additional income after a shorter anticipation duration, in excess of what standard models predict. While households receiving stimulus payments do not increase spending in advance, the additional consumption expenditure in the month after receiving payment drops by about 30 percent for each additional week that a household waits for their payment. Savings data from Kenya and Malawi show comparable effects. We estimate a model that incorporates this novel form of history dependence to discuss implications for the design of fiscal stimulus policies and cash transfer programs. Our evidence and approach reconcile seemingly conflicting results that consumption responds to anticipated payments in some settings but not others.

Suggested Citation

Thakral, Neil and Tô, Linh, Anticipation and Consumption (November 1, 2022). Available at SSRN: or

Neil Thakral (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States


Linh Tô

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States


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