Angelucci, Manuela Chiapa, Carlos Prina, Silvia Rojas, Irvin
Year of Publication:
IZA Discussion Papers No. 14452
Institute of Labor Economics (IZA), Bonn
We study how 3,534 beneficiaries of PROSPERA, Mexico's cash transfer program, smooth food consumption around the transfer payday, an anticipated and transitory income shock. We find that food consumption and food security do not change around the transfer payday, including for recipients with impatient or time-inconsistent preferences and households with higher than median transfer dependence. Conversely, health and employment shocks (unexpected and less transitory income changes) reduce food security. The transfer's relative illiquidity may act as a commitment device, helping time-inconsistent and less experienced debit card holders smooth consumption.
consumption smoothing permanent income hypothesis payday