Rebate Psychology, from the New York Times
Really interesting – though I guess it makes sense.
“If the current proposal for tax rebates sounds familiar, it’s because we have indeed been here before. In 2001, Congress and President Bush returned $38 billion to taxpayers in the form of $300 to $600 tax rebates, with the hope that Americans would stimulate the economy by spending them. But research conducted by two University of Michigan economists, Matthew Shapiro and Joel Slemrod, found that only 28 percent of the people in a national survey reported that they spent most of their rebate checks soon after receiving them. In a country where the personal savings rate has become negative by some accounts, people seem remarkably able to save at the very time their government needs them to spend.”
Is that a remarkably low number, though – 28 percent? If people perceive the economy to be doing relatively poorly (as it probably would be in most cases when a “rebate” is offered), then it’s difficult to expect people to go out and spend said “rebate”, true?
Americans start to pay as they go
Economy Fitful … from the NYT
“The top fifth of American earners generates half of all consumer spending, noted Dean Maki, chief United States economist at Barclays Capital”
We do have to realize, as it is not mentioned in the article, that “spending” includes spending on education. I would guess that the higher income families tend to have more children who attend private schools … and when they attend school, they don’t get financial aid. This might add to the seemingly large spending rate of the higher classes. Of course, it’s likely that the top fifth of earners do spend greater amounts in absolute value, even if the spending rate as a percentage is roughly equal …