Spending behavior and stimulus transfer use in response to income shocks among older Americans: evidence from the COVID-19 pandemic

TitleSpending behavior and stimulus transfer use in response to income shocks among older Americans: evidence from the COVID-19 pandemic
Publication TypeJournal Article
Year of Publication2023
AuthorsSharma, M, Babiarz, P
JournalApplied Economics Letters
Volume30
Issue12
Pagination1680-1684
KeywordsCOVID-19, Income shocks, Saving, Spending, stimulus checks
Abstract

This study examines household behavioural responses to the pandemic-induced income shocks regarding their overall spending and spending out of 2020 CARES stimulus payments. Using data from the 2020 Health and Retirement Study COVID-19 project and restricting our sample to older adults (51 years old and above), we show that the negative income shocks experienced during the COVID-19 pandemic put downward pressure on household spending. Results also reveal that, relative to those who did not experience an income shock, stimulus recipients who experienced income losses were more likely to use the stimulus transfer to increase spending, pay off debt, or for other purposes rather than to save.

DOI10.1080/13504851.2022.2078774
Citation Key12450