Data and Code for: LESS is MORE: Consumer Spending and the Size of Economic Stimulus Payments
Abstract
We study the consumption response to unexpected transitory income gains of different size, using hypothetical questions from the Italian Survey of Household Income and Wealth. Families with low cash-on-hand display a higher Marginal Propensity to Consume (MPC) out of the small gains while affluent households exhibit a higher MPC out of the large gains. The spending behaviour of low-income families is consistent with the predictions of models with borrowing constraints and uninsurable income risk whereas the consumption pattern of higher earners can be accounted for by non-homothetic preferences on non-essentials. Our results suggest that, for a given level of public spending, a fiscal transfer of smaller size paid to a larger group of low-income households stimulates aggregate consumption more than a larger transfer paid to a smaller group.
Fields of Study & Subjects
Financial Literacy
Pension
Retirement Analysis
Income
Poverty
and Inequality
Monetary Policy and Economic Impact
Publication details
- Journal / source
- ICPSR Data Holdings
- Publication date
- 12 January 2026
- Language
- EN
- Document type
- Dataset