Five facts about MPCs: evidence from a randomized experiment

Johannes Boehm, Etienne Fize and Xavier Jaravel

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We present experimental evidence on the marginal propensity to consume (MPC) out of transitory transfers, distributing prepaid debit cards with different features. The one-month MPC is substantially higher with a card expiring after three weeks (61%), compared to a transfer without expiration (23%). The finding that households consume more when presented with an urgent spending need lends support to theories where the salience of treatments affects choices. We also estimate that the consumption response is concentrated in the first weeks after the transfer and that a large fraction of households has high MPCs, even those with high liquid wealth.

Keywords: marginal propensity to consume; randomized controlled trial; helicopter money (search for similar items in EconPapers)
JEL-codes: C93 D12 D91 E21 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2024-05-10
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http://eprints.lse.ac.uk/126807/ Open access version. (application/pdf)

Related works:
Journal Article: Five Facts about MPCs: Evidence from a Randomized Experiment (2025)
Working Paper: Five facts about MPCs: evidence from a randomized experiment (2025)
Working Paper: Five facts about MPCs: Evidence from a randomized experiment (2024)
Working Paper: Five Facts about MPCs: Evidence from a Randomized Experiment (2023)
Working Paper: Five Facts about MPCs: Evidence from a Randomized Experiment (2023)
Working Paper: Five Facts about MPCs: Evidence from a Randomized Experiment (2023)
Working Paper: Five Facts about MPCs: Evidence from a Randomized Experiment (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:126807

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