OBJECTIVES
In May 2008, the Internal Revenue Service started mailing Economic Stimulus Payments (also called tax rebates) to qualified income tax filers. Payment amounts were based on filing status, income, and number of children under 18. Similarly, in 2009, the Social Security Administration administered the delivery of one-time economic recovery payments of $250 for most recipients of Social Security, Railroad Retirement, Supplemental Security Income, and Veterans’ Benefits.
Objectives of this research include:
- Describing demographics of families receiving these payments;
- Describing characteristics of the rebates (e.g., amount and number received)
- Assessing which characteristics, including income, family size, and amount of rebate (where applicable) most influence predicted probability of using the payments mostly for spending, saving, or paying off debt.
DATA/METHODS:
The Consumer Expenditure Survey is the most detailed source of expenditures, demographics, and income collected from consumers by the Federal government. In order to examine the impact of these payments, special questions were included in the Interview component from June 2008 through March 2009 (rebates) and July through September 2009 (recovery payments) to collect information on the amount and use of these payments. About 7,000 participants in the Interview Survey are visited once every three months for four consecutive quarters, and report expenditures made during the last three months.
Characteristics of recipients and non-recipients, such as age, income, and family size are compared and differences tested for statistical significance. Additional characteristics of recipients, such as number and amounts of rebates received, and form of receipt (check or electronic funds transfer) are also compared. Multinomial logistic regression is used to predict probability that recipients used the payments mostly for spending, saving, or paying off debt.
RESULTS/EXPECTED RESULTS
Given that the purpose of the payments was to provide economic stimulus, it is extremely important for economists and policy makers to understand how consumers used the payments they received. The results show that about half of recipients of the tax rebates used the payments was to pay off debt, compared to about one-third of recipients of the economic recovery payments However, on average, recipients of the economic recovery payments were older and had lower incomes than recipients of tax rebates. Research is underway to see for how much of the difference in use the differences in demographic characteristics account.