Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/339499 
Year of Publication: 
2025
Series/Report no.: 
IFS Working Papers No. 25/25
Publisher: 
The Institute for Fiscal Studies (IFS), London
Abstract: 
Different methods of eliciting the Marginal Propensity to Consume give very different distributions. Mean MPCs range from below 0.1, indicating life-cycle consumers, to over 0.5, consistent with consumers being hand-to-mouth. We conducted a randomized survey experiment to test if this difference arises because of question wording: we compare using a direct question and a filtered question. Survey wording has large effects on (i) the mean MPC, (2) the extensive margin, and (3) how MPCs vary with payment size, spending horizon, and liquidity. MPCs elicited using a filtered question are much closer to results from using a covariance restriction approach.
Subjects: 
MPCs
survey experiment
JEL: 
D12
D14
E21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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