Five Facts about MPCs: Evidence from a Randomized Experiment
Open accessAbstract
We present five facts from an experiment on the marginal propensity to consume (MPC) out of transitory transfers: (1) the one-month MPC on a cash-like transfer is 23 percent; (2) it is substantially higher (61 percent) on a transfer administered via a card where remaining funds expire after three weeks, inconsistent with money fungibility; (3) the consumption response is concentrated in the first three weeks; (4) MPCs vary with household characteristics but are high even for the liquid wealthy; (5) unconditional MPC distribution exhibits large variation. Our findings inform the design of stimulus policies and pose challenges to existing macroeconomic models. (JEL D12, D91, E21, G51, I38)
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Integrity signals
Registry
Cites
Statistics
Claims the paper makes
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Claims other papers make about this one
Each is checked against this paper’s own text: does it say what the citing paper says it does?
In the large literature estimating the MPC from small, transitory shocks, most such shocks are around $500 and are typically assumed not to have wealth effects.
“In the large literature estimating the Marginal Propensity to Consume (MPC) from small, transitory shocks, most such shocks are around $500 and are typically assumed not to have wealth effects”
From Student Loan Forgiveness (2025) · cites this paper as Boehm et al., 2024
The Introduction and Related literature sections describe extensive research on MPCs and the paper’s focus on transitory transfers; the Experimental Design section specifies a 300-euro transfer. Our copy does not establish that most shocks studied in the literature are around $500 or that they are typically assumed to have no wealth effects. Page numbers are unavailable in the indexed passages. (LLM, conf=0.84)
Experimental — accuracy not yet measuredThe MPC of 0.27 is similar to the baseline estimate from Boehm et al. (2025) but much smaller than MPCs for expiring transfers.
“Compared to transitory transfers, our MPC of 0.27 is similar to the baseline estimate from Boehm et al. (2025) but much smaller than MPCs for expiring transfers.”
From Student Loan Forgiveness (2025) · cites this paper as Boehm et al. (2025)
Self-check
Percentages, sums and reported differences re-computed from the paper’s own numbers.
The self-check needs the paper’s full text.
Cites
Unobservable Selection and Coefficient Stability: Theory and Evidence
Oster, E. (2019) · Journal of Business & Economic Statistics · doi:10.1080/07350015.2016.1227711 · Cited by 5,367 · see citing works
Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects
de Chaisemartin, C., & D’Haultfœuille, X. (2020) · American Economic Review · doi:10.1257/aer.20181169 · Cited by 5,031 · cited 1× · see citing works
“Given that a control group of untreated households is available, our two-way specification is not subject to the “negative weights” issue analyzed in recent work on difference-in-differences design ( e.g., De Chaisemartin and Haultfoeuille 2020; Borusyak, Jaravel, and Spiess 2023 .”
Revisiting Event-Study Designs: Robust and Efficient Estimation
Borusyak, K., Jaravel, X., & Spiess, J. (2024) · Review of Economic Studies · doi:10.1093/restud/rdae007 · Cited by 2,280 · see citing works
Self-citationThe Marginal Propensity to Consume in Heterogeneous Agent Models
Kaplan, G., & Violante, G. L. (2022) · Annual Review of Economics · doi:10.1146/annurev-economics-080217-053444 · Cited by 116 · see citing works
A Simple Mapping from MPCs to MPXs
Laibson, D. I., Maxted, P., & Moll, B. (2022) · SSRN Electronic Journal · doi:10.2139/ssrn.4010519 · Cited by 32
Flagged first, then by citations
Research works printed but not linked: 27
- Achdou, Yves, Jiequn Han, Jean-Michel Lasry, Pierre-Louis Lions, and Benjamin Moll, "Income and wealth distribution in macroeconomics: A continuous-time approach," The review of economic studies, 2022, 89 (1), 45-86.
- Altonji, Joseph G, Todd E Elder, and Christopher R Taber, "Selection on observed and unob- served variables: Assessing the effectiveness of Catholic schools," Journal of political economy, 2005, 113 (1), 151-184. 4.2
- As usual, the GE response could be limited if supply constraints were binding (see e.g. Orchard et al. (2023b)). Supply constraints may be more likely to bind if spending is very concentrated in the short run. , Yuriy Gorodnichenko, Shachar Kariv, Dmitri Koustas, Matthew D Shapiro, Dan Sil- verman, and Steven Tadelis, "The response of consumer spending to changes in gasoline prices," American Economic Journal: Macroeconomics, 2023, 15 (2), 129-160.
- Golosov, Mikhail, Michael Graber, Magne Mogstad, and David Novgorodsky, "How Amer- icans respond to idiosyncratic and exogenous changes in household wealth and unearned income," Quarterly Journal of Economics, 2024. 2, 1, 6
- Hastings, Justine and Jesse M Shapiro, "How are SNAP benefits spent? Evidence from a retail panel," American Economic Review, 2018, 108 (12), 3493-3540. 1, 5.1.2, 38
- Hastings, Justine S and Jesse M Shapiro, "Fungibility and consumer choice: Evidence from com- modity price shocks," The quarterly journal of economics, 2013, 128 (4), 1449-1498. 1, 5.1.2, 38
- Hsieh, Chang-Tai, Satoshi Shimizutani, and Masahiro Hori, "Did Japan's shopping coupon program increase spending?," Journal of Public Economics, 2010, 94 (7-8), 523-529.
- Ilut, Cosmin and Rosen Valchev, "Economic agents as imperfect problem solvers," The Quarterly Journal of Economics, 2023, 138 (1), 313-362. 1, 5.1.2
- Jappelli, Tullio and Luigi Pistaferri, "The Consumption Response to Income Changes," Annual Review of Economics, 2010. 1
- and , "Fiscal policy and MPC heterogeneity," American Economic Journal: Macroeconomics, 2014, 6 (4), 107-136. 1, 41
- Johnson, David S, Jonathan A Parker, and Nicholas S Souleles, "Household expenditure and the income tax rebates of 2001," American Economic Review, 2006, 96 (5), 1589-1610.
- Kan, Kamhon, Shin-Kun Peng, and Ping Wang, "Understanding consumption behavior: Evidence from consumers' reaction to shopping vouchers," American Economic Journal: Economic Policy, 2017, 9 (1), 137-153.
- Benjamin Moll, and Giovanni L Violante, "Monetary policy according to HANK," American Economic Review, 2018, 108 (3), 697-743. 1, 5.1.1, D Kim, Moon Jung and Soohyung Lee, "Can stimulus checks boost an economy under COVID-19? Evidence from South Korea," International Economic Journal, 2021, 35 (1), 1-12.
- A Ku, Inhoe, Sunyu Ham, and Heyjin Moon, "Means-tested COVID-19 stimulus payment and con- sumer spending: Evidence from card transaction data in South Korea," Economic Analysis and Policy, 2023, 78, 1359-1371.
- A Kueng, Lorenz, "Excess sensitivity of high-income consumers," The Quarterly Journal of Economics, 2018, 133 (4), 1693-1751. 2, 1, 5.1.1
- Liu, Qiao, Qiaowei Shen, Zhenghua Li, and Shu Chen, "Stimulating consumption at low budget: Evidence from a large-scale policy experiment amid the COVID-19 pandemic," Management Science, 2021, 67 (12), 7291-7307.
- Misra, Kanishka and Paolo Surico, "Consumption, income changes, and heterogeneity: Evidence from two fiscal stimulus programs," American Economic Journal: Macroeconomics, 2014, 6 (4), 84- 106. 1, 4.
- Nakamura, Emi and Jón Steinsson, "Five facts about prices: A reevaluation of menu cost models," The Quarterly Journal of Economics, 2008, 123 (4), 1415-1464. 6
- and , "Identification in macroeconomics," Journal of Economic Perspectives, 2018, 32 (3), 59-86.
- Olafsson, Arna and Michaela Pagel, "The liquid hand-to-mouth: Evidence from personal finance management software," The Review of Financial Studies, 2018, 31 (11), 4398-4446. 1, 5.1.1
- Parker, Jonathan A, "Why dont households smooth consumption? Evidence from a $25 million ex- periment," American Economic Journal: Macroeconomics, 2017, 9 (4), 153-183.
- and Nicholas S Souleles, "Reported effects versus revealed-preference estimates: Evidence from the propensity to spend tax rebates," American Economic Review: Insights, 2019, 1 (3), 273-90. 1, 41 , Jake Schild, Laura Erhard, and David Johnson, "Economic Impact Payments and Household Spending During the Pandemic," Brookings Papers on Economic Activity, 2022. 1, 5.2 , , , and , "Household spending responses to the economic impact payments of 2020: Evidence from the consumer expenditure survey," NBER Working Paper, 2022. 1, 5.2 , Nicholas S Souleles, David S Johnson, and Robert McClelland, "Consumer spending and the economic stimulus payments of 2008," American Economic Review, 2013, 103 (6), 2530-2553. 1, 5.1.1, 5.1.1
- Schennach, Susanne M, "Recent advances in the measurement error literature," Annual Review of Economics, 2016, 8, 341-377. 4.2
- Shapiro, Matthew D and Joel Slemrod, "Consumer response to tax rebates," American Economic Review, 2003, 93 (1), 381-396.
- and , "Did the 2008 tax rebates stimulate spending?," American Economic Review, 2009, 99 (2), 374-379.
- Shefrin, Hersh M and Richard H Thaler, "The behavioral life-cycle hypothesis," Economic inquiry, 1988, 26 (4), 609-643. 5.1.2, 36, F Stephens, Melvin and Takashi Unayama, "The consumption response to seasonal income: Evidence from Japanese public pension benefits," American Economic Journal: Applied Economics, 2011, 3 (4), 86-118.
- Thaler, Richard H, "Anomalies: Saving, fungibility, and mental accounts," Journal of economic per- spectives, 1990, 4 (1), 193-205. 5.1.2, F Tversky, Amos and Daniel Kahneman, "Advances in prospect theory: Cumulative representation of uncertainty," Journal of Risk and uncertainty, 1992, 5, 297-323.
Cited by
Sorted by citations
Dinerstein, M., Earnest, S., Koustas, D., & Yannelis, C. (2025) · NBER Working Paper Series · doi:10.3386/w33462 · Cited by 2 · see citing works
- Authors
- Boehm, J., Fize, E., & Jaravel, X.
- Affiliations
- Graduate Institute of International and Development Studies (CH)
- Paris School of Economics, Institut des politiques publiques (email: )
- Center for Economic and Policy Research (US)
- ORCID
- Jaravel, Xavier
- Venue
- American Economic Review
- Publisher
- American Economic Association
- Published
- 2025-01-01
- Volume
- 115
- Issue
- 1
- Pages
- 1-42
- ISSN
- 0002-8282 (ISSN-L)
- 1944-7981
- OpenAlex
- W4405889141
- Cited by
- 30
- References
- 5
- Citations by year
- 2026: 5 · 2025: 16 · 2024: 5 · 2023: 2 · 2022: 2
- FWCI
- 17.43
- Type
- journal article
- Language
- en
- Open access
- green
- orcid.org
- Locations
- American Economic Review (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- London School of Economics and Political Science Research Online (London School of Economics and Political Science) (submittedVersion)
- London School of Economics and Political Science Theses Online (London School of Economics and Political Science) (submittedVersion)
- Graduate Institute Geneva Institutional Repository (Graduate Institute of International and Development Studies) (submittedVersion, cc-by-nc-nd)
- Graduate Institute Geneva Institutional Repository (Graduate Institute of International and Development Studies) (submittedVersion)
- Funders
- UK Research and Innovation (EP/X016056/1)
- Agence Nationale de la Recherche (ANR-20-CE26-0006)
- Economic and Social Research Council
- Topics
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
- Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic and Fiscal Studies
- Keywords
- marginal propensity to consume, consumption response, economic stimulus policy, household heterogeneity, macroeconomic modeling
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
Are you an author, or do you see a problem with this page? Request a review
