Replication data for: Consumer Spending during Unemployment: Positive and Normative Implications

Principal Investigator(s): View help for Principal Investigator(s) Peter Ganong; Pascal Noel

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Project Citation:

Ganong, Peter, and Noel, Pascal. Replication data for: Consumer Spending during Unemployment: Positive and Normative Implications. Nashville, TN: American Economic Association [publisher], 2019. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-07. https://doi.org/10.3886/E116193V1

Project Description

Summary: Using de-identified bank account data, we show that spending drops sharply at the large and predictable decrease in income arising from the exhaustion of unemployment insurance (UI) benefits. We use the high-frequency response to a predictable income decline as a new test to distinguish between alternative consumption models. The sensitivity of spending to income we document is inconsistent with rational models of liquidity-constrained households, but is consistent with behavioral models with present-biased or myopic households. Depressed spending after exhaustion also implies that the consumption-smoothing gains from extending UI benefits are four times larger than from raising UI benefit levels.

Scope of Project

JEL Classification:
      D14 Household Saving; Personal Finance
      D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
      E21 Macroeconomics: Consumption; Saving; Wealth
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      E70 Macro-Based Behavioral Economics: General
      J65 Unemployment Insurance; Severance Pay; Plant Closings

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Published Versions

V1 [2019-12-07]

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DDI 2.5

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