Financial behavior and uncertain tax refunds: a new test of precautionary saving among low-income households

Grant description:

This research seeks to better understand how readily low-income households spend an extra dollar of income by utilizing a novel quasi-experimental design based on the uncertainty of tax refunds. A better understanding of the marginal propensity to consume at the bottom of the income distribution has important implications for the design of fiscal stimulus and unemployment insurance systems, as well as the tax system.