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MPCs were directly elicited from a representative sample of UK adults in July 2020 using receipt of a hypothetical unanticipated, one-time income payment. Reported MPCs are low, around 11% on average. They are higher, but still modest, for individuals in households with high current needs. These low MPCs may be a consequence of the prevailing economic un-certainty. Further, the fraction of respondents that report they would change their transfer payments to or from family and friends is almost as large as the fraction that report they would increase their spending. This means that targeting direct fiscal stimulus payments to high-MPC individuals could be partly undone, and that the aggregate MPC out of a stimulus payment need not equal the population-average MPC.
Authors
Research Fellow University of Oxford
Hamish is the James Meade Professor of Economics at the University of Oxford, a Professorial Fellow of Nuffield College and a Research Fellow at IFS.
Research Fellow University of Michigan
Tom is a Research Fellow at IFS, a Research Professor for the Institute for Social Research at the University of Michigan.
Associate Director
Peter joined in 2009. He has published several papers on the microeconomics of household spending and labour supply decisions over the life-cycle.
Paul Fisher
Working Paper details
- DOI
- 10.1920/wp.ifs.2021.321
- Publisher
- The IFS
Suggested citation
Crossley, T et al. (2021). MPCs through COVID: spending, saving and private transfers. London: The IFS. Available at: https://ifs.org.uk/publications/mpcs-through-covid-spending-saving-and-private-transfers-0 (accessed: 19 April 2024).
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