Anticipation and Consumption

102 Pages Posted: 23 Feb 2021 Last revised: 1 Oct 2021

See all articles by Neil Thakral

Neil Thakral

Brown University - Department of Economics

Linh Tô

Boston University - Department of Economics

Date Written: October 1, 2021

Abstract

Cash transfer payments are an increasingly widespread policy tool in developed and developing countries, used for both short-term and long-term objectives. We study the design of these policies by examining how the time horizon over which households anticipate receiving transfer payments affects consumption and savings. Using Nielsen Consumer Panel data, we estimate higher marginal propensities to spend for US households scheduled to receive the 2008 Economic Stimulus Payments sooner. Analyzing data from randomized experiments in Kenya and Malawi, we document higher savings among households scheduled to wait longer before receiving lump-sum transfers. We discuss implications of our results through a model of mental accounting.

Suggested Citation

Thakral, Neil and Tô, Linh, Anticipation and Consumption (October 1, 2021). Available at SSRN: https://ssrn.com/abstract=3756188 or http://dx.doi.org/10.2139/ssrn.3756188

Neil Thakral (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

HOME PAGE: http://sites.google.com/brown.edu/nthakral/

Linh Tô

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States

HOME PAGE: http://linh.to/

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