Understanding Consumption Behavior: Evidence from Consumers' Reaction to Shopping Vouchers

Kan, Kamhon; Peng, Shin‐Kun; Wang, Ping

doi:10.1257/pol.20130426

Cited by 37 publications

(30 citation statements)

References 9 publications

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“…A large literature explores the marginal propensity to consume from unanticipated income shocks. For example, Kan, Peng, and Wang (2017) analyze a $2.6 billion shopping voucher program in Taiwan and find that each dollar of vouchers leads to $0.24 of increased spending. Fagereng, Holm, and Natvik (2019) use lottery winners in Norway to measure the MPC for lottery prizes, which range from around 50% for highliquidity winners of large prizes to 100% for low-liquidity lottery winners who win small prizes.…”

Section: Introductionmentioning

confidence: 99%

Heterogeneity in the Marginal Propensity to Consume: Evidence from Covid-19 Stimulus Payments

Karger

Rajan

2020

SSRN Journal

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We identify 22,461 recipients of Covid-19 Economic Impact Payments in anonymized transaction-level bank account data from Facteus. We use an event study framework to show that in the two weeks following a $1,200 stimulus payment in April 2020, consumers increased spending by $546, implying a marginal propensity to consume of 46%. Consumers used an additional 10% of the stimulus payment to pay off debt. Consumer spending fell to normal levels after two weeks. Stimulus recipients who live paycheckto-paycheck spent 60% of the stimulus payment within two weeks, while recipients who save much of their monthly income spent only 24% of the stimulus payment within two weeks. Spending patterns are quite similar for the second round of stimulus payments in January, 2021, with consumers spending 39% of their stimulus payments within two weeks and using an additional 14% of their payment to pay off debt. Reweighting our data to match the U.S. population, ignoring equilibrium effects, and assuming a constant MPC for each person, we estimate that the CARES Act's $296 billion of stimulus payments increased consumer spending by $130 billion (44% of total outlays) within two weeks of stimulus receipt. A stimulus bill targeted at individuals with the highest MPCs could have increased consumer spending and debt payments by the same amount at a cost of only $246 billion.

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Section: Introductionmentioning

confidence: 99%

Heterogeneity in the Marginal Propensity to Consume: Evidence from Covid-19 Stimulus Payments

Karger

Rajan

2020

SSRN Journal

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“…The coupons will be accepted at an estimated 140,000 restaurants around Taiwan, as well as 280,000 businesses in shopping centers, 10,000 night markets, and 1,700 arts and culture spots.17 There is a NT$ 2.2 billion administrative cost for the coupons. Based on the MPC estimates fromKan et al (2017) Dr. Kan estimated in a conference in August that it can only contribute to a 0.08 percent GDP (around NT$ 15.27 billion) increase.…”

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confidence: 99%

COVID-19 in Taiwan: Economic Impacts and Lessons Learned*

Kuo

2021

Asian Economic Papers

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This paper illustrates Taiwan's experience in controlling the virus and curbing the impact of COVID-19 on its economy. All the following factors contributed to Taiwan's early success in fighting COVID-19: the early establishment of a command center, the “precision-prevention” model of strategies that include tight border controls and strict quarantine policy, the procuring of sufficient anti-pandemic medical supplies, and educating residents about public health awareness, e.g. promoting face mask wearing in public, maintaining proper social distance, and handwashing procedures. In addition, the country's medical facilities and a national health insurance program that are already in place along with the utilization of technology and big data also play a crucial role during the pandemic. Taiwan's success story may open up opportunities for the country to assume a leading role as a facilitator in the reallocation of the global supply chain and the creation of a new worldwide health coalition that includes Taiwan, unlike its lonely efforts 17 years ago when SARS hit the Southeast Asian and Pacific regions.

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“…Publicity can be achieved through government marketing campaigns, but also through accompanying promotional activities by companies. For example, Kan, Peng, and Wang (2017) found that vendors' discounts for a voucher program significantly increased the effectiveness of this policy tool.…”

Section: Effectiveness Of Tax Policy Measures To Stimulate Consumptionmentioning

confidence: 99%

Tax Policy Measures to Combat the SARS-CoV-2 Pandemic and Considerations to Improve Tax Compliance: A Behavioral Perspective

Alm

Blaufus

Fochmann

et al. 2020

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Governments have taken remarkable measures during the SARS-CoV-2 pandemic in their efforts to safeguard citizens' health and the economy. As a consequence, public debts have reached unprecedented levels, which will require at some point higher taxes. Ensuring that citizens pay these taxes requires consideration of the many factors that will likely affect their tax compliance decisions. In this paper, we reflect from a behavioral economic perspective the impact of tax policy measures on the perception, evaluation, and behavior of citizens and derive considerations to devise appropriate tax policies to ensure compliance in the future. We start with speculations about citizens' views of governmental restrictions and economic stimulus measures in response to the crisis, we apply these speculations to the acceptance and perceived effectiveness of policy measures on citizens' tax compliance behaviors, and we finish with their likely impact on determinants of tax compliance. Building on the derived insights, we deduce a set of considerations to improve tax complianceand to generate the necessary tax revenues to deal with the after-effects of SARS-CoV-2 when the pandemic is under control: communication, transparency and justification of measures, access to support, service provision, audits and penalties in case of free-riding, targeted audits, building social norms of cooperation, consideration of framing effects, development of plans and strategies for the future, and anticipation of hindsight biases.

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Understanding Consumption Behavior: Evidence from Consumers' Reaction to Shopping Vouchers

Cited by 37 publications

References 9 publications

Heterogeneity in the Marginal Propensity to Consume: Evidence from Covid-19 Stimulus Payments

Heterogeneity in the Marginal Propensity to Consume: Evidence from Covid-19 Stimulus Payments

COVID-19 in Taiwan: Economic Impacts and Lessons Learned*

Tax Policy Measures to Combat the SARS-CoV-2 Pandemic and Considerations to Improve Tax Compliance: A Behavioral Perspective

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