4 ms·

When poor people get money they spend it. Almost all of it. Very little goes into a bank account. This increase in spending leads to more jobs for obvious r

When poor people get money they spend it. Almost all of it. Very little goes into a bank account. This increase in spending leads to more jobs for obvious reasons.

yummyfajitas 16y ago
This is popular misconception. It sounds good, but it just isn't true. http://www-personal.umich.edu/~shapiro/TaxRebates.pdf http://www-personal.umich.edu/~shapiro/TaxRebates.pdf
- anigbrowl 16y ago
  The reliability of that data is somewhat questionable, given that studies since then have taken issue with these findings, both in relation to the 2008 tax rebates (1) and later analysis of rebates paid in 2001 (2). 1. http://www.voxeu.org/index.php?q=node/1541 http://www.voxeu.org/index.php?q=node/1541 2. http://www.nber.org/papers/w10784 http://www.nber.org/papers/w10784 Whichever interpretation one places on it, it strikes me that the arguments for against payments are fundamentally identical to those regarding tax cuts.
  - yummyfajitas 16y ago
    Regarding link 1, it reports spending as a % of household income. That's a silly way to report the data. A quick google search suggests the average household income of $70k in greater LA. Treating low income households as earning $15k (an overestimate) and treating all other households as earning $70k (an underestimate, since low income households are excluded), we find that high income households spend 2x more as a result of stimulus. (Rough numbers, but it's the best I can do. They don't provide all necessary data to get precise numbers.) Link 2 is gated, I can't get in. See also this paper, which shows the same effect happened in the current recession. http://papers.nber.org/papers/w16246 http://papers.nber.org/papers/w16246 (Ungated: http://ow.ly/2Fx1i http://ow.ly/2Fx1i )
- yequalsx 16y ago
  The abstract says it's a survey of what people intended to do. The paper is 55 pages long and given what the abstract says I'm guessing they didn't follow up to see what people actually did. People intend to lose weight but often times don't follow through. The multiplier effect of giving money to poor people is much higher than giving it to rich people.

When poor people get money they spend it. Almost all of it. Very little goes into a bank account. This increase in spending leads to more jobs for obvious reasons.

yummyfajitas 16y ago

This is popular misconception. It sounds good, but it just isn't true. http://www-personal.umich.edu/~shapiro/TaxRebates.pdf http://www-personal.umich.edu/~shapiro/TaxRebates.pdf

anigbrowl 16y ago
The reliability of that data is somewhat questionable, given that studies since then have taken issue with these findings, both in relation to the 2008 tax rebates (1) and later analysis of rebates paid in 2001 (2). 1. http://www.voxeu.org/index.php?q=node/1541 http://www.voxeu.org/index.php?q=node/1541 2. http://www.nber.org/papers/w10784 http://www.nber.org/papers/w10784 Whichever interpretation one places on it, it strikes me that the arguments for against payments are fundamentally identical to those regarding tax cuts.
- yummyfajitas 16y ago
  Regarding link 1, it reports spending as a % of household income. That's a silly way to report the data. A quick google search suggests the average household income of $70k in greater LA. Treating low income households as earning $15k (an overestimate) and treating all other households as earning $70k (an underestimate, since low income households are excluded), we find that high income households spend 2x more as a result of stimulus. (Rough numbers, but it's the best I can do. They don't provide all necessary data to get precise numbers.) Link 2 is gated, I can't get in. See also this paper, which shows the same effect happened in the current recession. http://papers.nber.org/papers/w16246 http://papers.nber.org/papers/w16246 (Ungated: http://ow.ly/2Fx1i http://ow.ly/2Fx1i )
yequalsx 16y ago
The abstract says it's a survey of what people intended to do. The paper is 55 pages long and given what the abstract says I'm guessing they didn't follow up to see what people actually did. People intend to lose weight but often times don't follow through. The multiplier effect of giving money to poor people is much higher than giving it to rich people.