A Temporary Federal Discount Program to Stimulate Consumer Spending

In this paper, we evaluate a new proposal to stimulate recovery from the current recession: a temporary federal price discount on consumer goods. An attractive feature of the temporary federal discount program is that it gives consumers a price incentive to purchase more rather than simply giving consumers more disposable income, which they might choose to either spend or to save. According to our simulations with the Fair macro-econometric model, a temporary 20 percent federal discount on all consumer goods in a severe recession would significantly reduce the unemployment rate while causing only a small increase in federal debt as a percentage of GDP.     

Practical Economics and Computing at Brand Level

You cannot make good marketing plans without estimates of the likely effects of your actions. But many decisions are taken—for example, whether to spend more or less on advertising—with little analysis of the results of such changes in the past. Meanwhile the data, which might reveal useful relationships between actions and sales effects, receive only cursory inspection. And economic theorists spend little time helping manufacturers at the level of the brand. A few advertising agencies appreciate that their own work would be better valued, and their clients would receive better advice, if they looked harder for the sales effects of advertising and other marketing decisions. Leo Burnett is one of these forward-looking agencies, and this paper describes some of the work they have carried out.     

基于跨期选择、价格歧视的供给者与消费者博弈

消费者具有为未来需要储存的倾向,更愿意通过储存获得跨期套利。本文通过建立跨期选择模型,运用不完全信息静态博弈的方法研究供给者和消费者跨期选择行为,认为供给者收益增加增强了供给者改善储存工艺、延长价格歧视行为的动机;消费者随着收入的增加对价格变化的敏感度降低,储存倾向也降低,消费者跨期选择效用变化不显著,同时社会福利也趋于增加。     

Old-Young Differences in Consumer Expenditure Patterns

It has been claimed that transfer payments to retired people reduce aggregate private saving. In their attempts to understand this issue, some writers have called for additional research to clarify the spending behavior of the older and younger households. The present paper uses regression analysis to examine the old-young differences in expenditure patterns as revealed by the 1972–73 BLS Consumer Expenditure Survey. With data limitations noted, the findings suggest that, for consumer units headed by older (65+) and younger (<65) persons, the marginal and average propensities to spend relative to after-tax income were virtually the same when estimated at the mean values of their respective characteristics, such as after-tax income and family size. The statistical model utilized also suggests that, if given the older units' mean values for these characteristics, the younger group would have exhibited higher propensities to spend than the older.     

Consumer Welfare and Inefficiency Among Regulated Industries

While the issue of efficiency on the side of production is still not a settled question, it is generally agreed that competition is more conductive to efficiency—both allocative and X—than monopoly. When the monopoly is regulated, i.e., receiving a rate of return less than it would if left unregulated but greater than the market rate of return, both allocative and X-inefficiency result. Since the degree of inefficiency amounts to a tax on consumers, the question of inefficiency in production has a twin companion in the form of consumer welfare losses. This is particularly true for many public utilities upon which low income families spend a large proportion of their income. The quasi tax that the regulated monopolist exacts neither generates a flow of public goods nor increases returns to shareholders. It is a particularly burdensome levy because the rate structure is highly regressive.     

How income shapes moral judgments of prosocial behavior

The current research extends past work on how consumers (as “observers”) view ethical choices made by others (“actors”). Using a person-centered approach to moral judgments, we show that consumers are judged differentially, based on their income, for engaging in certain prosocial behaviors. Nine studies demonstrate that engaging in the same prosocial behavior, such as volunteering, leads to different responses depending on whether the actor earns income versus receives government assistance. Consistent with our theorizing, we find that aid recipients are given less latitude in how they spend their time than those earning an income and are scrutinized to a greater degree for their choices because people believe their time would be better spent seeking employment. Consequently, the lower moral judgments of aid recipients who choose to volunteer (vs. income earners) are driven, at least in part, by the anger observers feel about the perceived misuse of time. Additional information or cues about employment efforts or work inability attenuate these judgments. Importantly, we document implications for support for federal spending on welfare programs.     

Encouraging Tax‐Time Savings with a Low‐Touch,Large‐Scale Intervention: Evidence from the Refund to Savings Experiment

Low‐ and moderate‐income households often struggle to save, but the annual tax refund represents a prime opportunity for these households to save toward their financial goals or build their emergency savings. This paper presents the results of a randomized, controlled experiment embedded in a free tax‐preparation product offered in 2013 to low‐ and moderate‐income households. The experiment involved approximately 470,000 filers and assessed the impact of behavioral interventions on their savings behaviors. The results show that filers exposed to the treatments, which involved the established behavioral‐economics techniques of anchoring, choice architecture, and persuasive messaging, were more likely than a control group to save their tax refund and, on average, saved more of the refund. A follow‐up survey of these tax filers found that the treatments were associated with saving more of the tax refund six months after filing. The findings also show that anchors encouraging filers to deposit certain amounts are more effective than persuasive messaging emphasizing savings.     

Domestic fuel expenditure and payment of fuel allowances

The allocation of additional requirements for heating to households on supplementary benefit (SB) has been challenged recently. Some households receiving an addition spend less on fuel than others which do not. The fuel expenditure of any household on SB is likely to be constrained by income and may reflect ability to pay rather than need. A group of households with zero or close to zero income elasticity for fuel expenditure is identified. The expenditure on fuel of these households can be considered not to be constrained by income and to reflect the real costs of maintaining a warm home in given circumstances. Their expenditure is then used to indicate how fuel allowances might be better targeted.     

Behavioral Interventions to Increase Tax‐Time Saving: Evidence from a National Randomized Trial

We provide new large‐scale experimental evidence on policies that aim to boost household saving out of income tax refunds. Households that filed income tax returns with an online tax preparer and chose to receive their refund electronically were randomized into eight treatment groups, which received different combinations of motivational saving prompts and suggested shares of the refund to save—25% and 75%—and a control group, which received neither. In treatment conditions where they were presented, motivational prompts focused on various savings goals: general, retirement, or emergency. Analysis reveals that higher suggested that allocations generated increased allocations of the refund to savings but that prompts for different reasons to save did not. These interventions, which draw on lessons from behavioral economics, represent potentially low‐cost, scalable tools for policy makers interested in helping low‐ and moderate‐income households build savings.     

CONSUMER SPENDING ON DESIGNER JEANS: A CLASSICAL CONDITIONING MODEL

The classical conditioning theory of learning was used to predict consumer spending on designer jeans. Subjects viewed and responded to eight slides of designer and non-designer jeans. In addition the presence or absence of designer labelled hangtags was varied so that half of the subjects were exposed to the hangtags and half of them were not exposed to the hangtags. Thus the design of the experiment was a mixed model two by two analysis of variance. It was predicted and found that subjects were likely to say they would spend more for the designer jeans than the non-designer jeans. Manipulation checks revealed that the subjects were not estimating or trying to guess the retail value of the jeans. It was also predicted and found that subjects were more likely to select designer jeans as gifts than non-designer jeans. Finally there was a designer jeans by hangtag interaction. People were more apt to select designer jeans as gifts than non-designer jeans, but only in the absence of the hangtags. When the hangtags were present the effect was negated. Classical conditioning theory is used to explain the results and to offer avenues for further research.     

MATURITY,STAGNATION AND CONSUMER DEBT: A STEINDLIAN APPROACH

This paper extends a Steindlian model of growth and income distribution to incorporate borrowing by consumers. It shows that borrowing by consumers can improve growth prospects in the short run by increasing consumer demand. However, in the longer run the effects of increasing consumer borrowing are ambiguous because, by increasing consumer debt, it redistributes income towards the rich who have a higher propensity to save, thereby possibly depressing aggregate demand and growth despite the borrowing‐induced expansion. The problem may be exacerbated by financial considerations involving the increase of the interest rate due to greater borrowing, but these considerations are not necessary for it. The problem is more likely to occur when autonomous investment demand is weak, i.e. when borrowing‐induced consumption increases are most required to counter tendencies towards stagnation.     

Analysis of tenure choice and housing expenditure patterns

This study employs a selectivity model to account for the simultaneity existing between determinations of tenure status and level of spending. Important socio-economic characteristics affecting housing tenure were identified. Results indicate that income had a more important effect on the housing expenditures of renters than owners at a lower household income level. The race of the household head had a significant effect on variations in housing expenditures for owners but not for renters, suggesting that race may be a more important factor in owner-occupant than in renter-occupant housing. While household size may be an important factor in a family's decision-making in terms of buying a home, it is suggested that once tenure status is selected family size had no significant impacts on housing expenditures. Similarly, married couples were most likely to own their own homes than were other household types; however, married households did not spend more or less than other types of households on either owned or rented accommodation. Furthermore, the analysis suggests that in assessing empirical results, attention should be given to meaningful interpretation of estimated selectivity effects as well as to testing for occurrence of selectivity bias.     

Household expenditure on poultry and seafood in the U.S.A. - a cross-sectional analysis

This study investigates the determinants of household expenditures on poultry and seafood using the 1992 Consumer Expenditure Survey. Higher income and larger households with a better-educated and older household head spend more on poultry, especially during the fourth quarter of the year, than others. Higher income and north-eastern households with a non-white and better-educated household head spend more on seafood than others. Poultry expenditures are more sensitive to changes in household size than to changes in household income. In contrast, seafood expenditures are more sensitive to changes in household income than to changes in household size.     

Socio‐demographic determinants of gambling participation and expenditures: evidence from Malaysia

This study examined the socio‐demographic determinants of participation and expenditure decisions on gambling among non‐Muslim households in Malaysia using data from the 2005–2006 Malaysian Household Expenditures Survey. Heckman's sample selection analysis was used to obtain consistent (unbiased) empirical estimates for the regression equation of gambling expenditures in the presence of censoring (observed zeros) in the dependent variable. Marginal effects were also calculated to further explore the effects of socio‐demographic variables on the probability and levels of gambling expenditures. The results indicated that non‐Muslim households in Malaysia who are more likely to participate and spend more in gambling include Chinese, affluent, male‐headed, younger and non‐white collar households. Specifically, households of Chinese descent have higher gambling probabilities and expenditures than Indians and those of other ethnic backgrounds. While education reduces and age increases the likelihood and expenditures of gambling among Chinese households, these effects are non‐extant for Indians and other ethnic groups. Higher income and male‐headed households were more likely to partake and have higher expenditures in gambling among all non‐Muslim ethnic groups. Finally, Chinese and Indian households headed by a white‐collar worker have lower gambling likelihoods and unconditional expenditures than their blue‐collar cohorts. Based on these results, several anti‐gambling policies were suggested to target those more likely to participate and spend more in gambling activities.     

Better marketing to developing countries: Why and how

Managers have long understood the rationale for investing in new products. Now, however, they face an even more compelling need: to invest in targeting new markets, specifically those in less developed countries (LDCs). The argument presented in this article, for initiating or increasing marketing efforts in these nations, makes two related points. First, a healthy world economy requires consumers in developing nations—particularly China—to spend more, because trade imbalances between the United States and LDCs cannot be sustained. Second, in order to foster consumption in LDCs and to profit from it, marketing expertise in the developed world must refocus. Success will require devising, promoting, and distributing products that will overcome economic constraints in some markets, and in others will overcome an understandable reluctance to spend rather than save. We suggest that lessons may be gleaned from examples regarding recent efforts targeting LDCs by a pharmaceutical company (Pfizer) and a food supplement marketer (Procter & Gamble), as well as efforts pioneered in less developed countries themselves (including low-cost private schools and $2,500 automobiles).     

Work versus windfall: An exploration of saving on subsequent purchase

Previous research has examined the effects of discounts and promotions on the future performance of a brand or store. However, no attempts have been made to explore how a consumer psychologically accounts for the way a savings is obtained or how that accounting process affects subsequent purchase decisions. This research employs an experimental approach to test the hypothesis that buyers will spend more (save less) of a savings that they obtain from a windfall gain than an equivalent amount obtained from a worked-for savings. Results are generally supportive of the hypothesis, revealing that consumers do treat savings differently depending on how they are obtained. This finding appears to hold over a wide range of saving magnitudes.     

Taxes and the time allocation patterns of married women with children: cross-cultural comparisons between the United States and Canada

It is widely recognized in the family economics literature that the structure of an income tax system affects labour supply. This paper examines and contrasts the effects of U.S. and Canadian tax policies on one particular group: married women with children. Using a household production model of time allocation, it is initially argued that U. S. tax policies promote market work for this group, while Canadian tax policies discourage market work for similar women. What is found is that Canadian women display weaker labour force attachment than American women and they spend more time in home production activities. These effects are consistent with initial predictions.     

Gender differences in financial socialization in the home—An exploratory study

Recent literature has stressed the need for research examining the causes of females in general having lower levels of financial literacy than males. This article uses social cognitive theory of gender development as a framework to propose differing financial socialization of children in the home by gender as a possible cause of gender differences later in life. Evidence is found of gender based differences in the financial socialization of eleven and twelve year olds. Findings include more frequent parent‐child discussions being correlated to more positive financial attitudes, but not to saving behaviour. Saving behaviour of children is influenced by attitudes to money along with the presence of parents when spending, which is subject to a same sex gender bias for girls, with large effect sizes. Girls are over 200% more likely to state they save some of their pocket money if their mother is present when they spend their pocket money, compared to having no parent present. This difference does not exist for male children. When a boy is with both parents when spending, they are 245% more likely to report saving some of their pocket money then when neither parent is present. Having a father present when spending does not yield significantly different results to when no parent is present. These findings of gender biased financial socialization in the home are important considerations for the design of school‐based financial literacy programmes. Specifically, these programmes should consider a goal of encouraging discussion and questioning gender based attitudes and roles in the home. They are also important findings in terms of going some way to explaining the existence of a gender difference in financial knowledge in adulthood.     

Designing Federal Budget Policy to Spur Economic Growth

Federal budget policy should focus on raising incomes for lower- and middle-income people, because they have benefited little from economic growth in the past few decades. That goal would be advanced by maintaining federal investment as a share of total output, reforming the tax code, encouraging innovation, reducing federal debt slowly, and reducing uncertainty about future policy. However, the likely effects of budget policy on income growth should not be exaggerated.     

The Distribution of U.S. Income and Food Expenditures

Food expenditure and income distributions over 1980–1985 are examined using two welfare criteria: less inequality and more available resources. Intertemporal changes in the distributions are studied from the perspectives of inequality, relative economic affluence, society's satisfaction with the distributions, asymmetries, and average propensities to spend. Major conclusions are that inequality has increased over time in both the income and food spending distributions, relative economic affluence has generally risen, society is less satisfied with the food spending distribution, and average propensities to spend on food have been constant.