Research Paper

Stimulus payments and private transfers

By Thomas F. Crossley, Paul Fisher, Peter Levell and Hamish Low

Publication details

Publication date
Series or book
IFS Working Paper Series
Series or chapter number
22/10
Pages
pp. 1–13
Publisher
Institute for Fiscal Studies
DOI
https://doi.org/10.1920/wp.ifs.2022.1022
View on ifs.org.uk

Summary

Private transfers can affect the spending response to stimulus payments, as those receiving income windfalls may transfer resources to other households in greater financial need. We report a survey experiment where individuals were asked how they would respond to a £500 payment, with a randomly selected subset of individuals explicitly told that all households would receive the same payments (a ‘public windfall’ scenario). This additional information increased MPCs by 11%. Reported transfer intentions in response to windfalls suggest that public payments crowd out private transfers, partly accounting for the higher MPCs in the public windfall case.

Notes

PLEASE CITE AS: Crossley, T.F., Fisher, P., Levell, P., and Low, H. (2023) 'Stimulus payments and private transfers', Economics Letters, 222:110944. https://doi.org/10.1016/j.econlet.2022.110944

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