Consumption, Savings, and Earnings Responses to Financial Windfalls (joint with Rajashri Chakrabarti, Philippe d’Astous, Sheisha Kulkarni, Vyacheslav Mikhed, Matthew J. Notowidigdo, Sahil Raina and Barry Scholnick)

About this event

We estimate the causal effects of a financial windfall on consumption, savings, and wage earnings using linked administrative data on a large sample of Canadian lottery winners. Using separate linkages of lottery winners to income tax records and credit bureau data, we estimate how lottery winnings affect consumption measured through credit card spending, savings through financial asset accumulation and debt repayment, and wage earnings from tax records. We then examine how these responses vary across the income distribution. We find that high-income individuals allocated a larger share of lottery winnings to savings and leisure, while low-income individuals spent a larger share on consumption. We illustrate the policy relevance of these heterogeneous responses through three applications: designing fiscal stimulus programs, evaluating a Universal Basic Income (UBI), and determining optimal top tax rates on wage earnings and savings.

Who

• Rajashri ChakrabartiSpeaker
• Philippe d’AstousSpeaker
• Sheisha KulkarniSpeaker
• Vyacheslav MikhedSpeaker
• Matthew J. NotowidigdoSpeaker
• Sahil RainaSpeaker
• Barry ScholnickSpeaker

Venue

The University of Michigan

Ann Arbor, MI

The University of Michigan is a public research university in Ann Arbor, Michigan, United States. It was founded in 1817 and is the oldest institution of higher education in the state. It is also one of the earliest American research universities and is a founding member of the Association of American Universities. Read more on Wikipedia

Venue website

All events at The University of Michigan · All venues in Ann Arbor