Work

Reported Effects versus Revealed-Preference Estimates: Evidence from the Propensity to Spend Tax Rebates

Year: 2019

Type: article

Abstract: We evaluate the consistency of two methods for estimating the effect of an economic policy: (i) asking people how the policy caused them to change their behavior (reported effects) and (ii) inferring this change using data on behavior and differences in treatment across people (revealed-preference estimates). Both methods are widely used to measure spending caused by increases in liquidity. Using federal stimulus payments disbursed quasi-randomly in 2008, we find larger revealed-preference estimates of spending propensities for households who report greater spending responses, and the methods produce similar average propensities. But evidence is mixed on the relationship between spending propensities and liquidity. (JEL C83, D14, D91, E62, H24, H31)

Source: American Economic Review Insights

DOI: 10.1257/aeri.20180333

Authors: Jonathan A. Parker, Nicholas S. Souleles

Institutions: Massachusetts Institute of Technology, University of Pennsylvania

Language: English

Topic: Economic and Fiscal Studies

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

Funders: Northwestern University, University of Chicago, Booth School of Business, University of Chicago, Sloan School of Management, Massachusetts Institute of Technology

OpenAlex ID: W2746969993

FWCI: 12.81

Cites: 34

Cited by: 76

Related to: 10