Stimulating Consumption at Low Budget: Evidence from a Large-Scale Policy Experiment Amid the COVID-19 Pandemic
Management Science
; : 18, 2021.
Article
in English
| Web of Science | ID: covidwho-1486636
ABSTRACT
We use a novel panel with detailed transaction records of more than one million de-identified individuals to study the effect of a large-scale Chinese government-issued digital coupon program on consumer spending. Exploiting a difference-in-differences approach, we find that the digital coupon is highly effective in stimulating consumption. An effective government subsidy of RMB 1 can drive excess spending of RMB 3.4 to RMB 5.8, and the effect persists across multiple coupon issuance waves. In explaining the results, we find that a behavioral model with mental accounting and loss aversion can match the empirical evidence from the field. Our analysis, by illustrating the importance of embedding behavioral factors into the design and implementation of public policy, informs the current debate about cost-effective policy tools to recover the economy.
Full text:
Available
Collection:
Databases of international organizations
Database:
Web of Science
Language:
English
Journal:
Management Science
Year:
2021
Document Type:
Article
Similar
MEDLINE
...
LILACS
LIS