[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/aea/aejmac/v15y2023i4p249-304.html
   My bibliography  Save this article

"Quick Response" Economic Stimulus: The Effect of Small-Value Digital Coupons on Spending

Author

Listed:
  • Jianwei Xing
  • Eric Yongchen Zou
  • Zhentoa Yin
  • Yong Wang
  • Zhenhua Li
Abstract
We study a new consumption stimulus program implemented by a large Chinese city that leverages mobile payment platforms to dispense massive amounts of small-value digital coupons. Exploiting a "rush" design of the dispensing process in which over 1 million program participants compete for coupons on a first-come, first-served basis through a digital portal, we estimate that winning coupons increases weekly out-of-pocket spending by US$3 for every US$1 in government subsidy. Coupon-winning consumers practice intertemporal substitution by moving up purchases that would have been made four months in the future. Customer flow analysis suggests that coupons distort consumption toward pricier options.

Suggested Citation

  • Jianwei Xing & Eric Yongchen Zou & Zhentoa Yin & Yong Wang & Zhenhua Li, 2023. ""Quick Response" Economic Stimulus: The Effect of Small-Value Digital Coupons on Spending," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(4), pages 249-304, October.
    • Handle: RePEc:aea:aejmac:v:15:y:2023:i:4:p:249-304
    DOI: 10.1257/mac.20210148
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/mac.20210148
    Download Restriction: no
    File URL: https://doi.org/10.3886/E179601V1
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/mac.20210148.ds
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://libkey.io/10.1257/mac.20210148?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Marc Rysman & Scott Schuh, 2017. "New Innovations in Payments," Innovation Policy and the Economy, University of Chicago Press, vol. 17(1), pages 27-48.
    2. Hanemann, W Michael, 1984. "Discrete-Continuous Models of Consumer Demand," Econometrica, Econometric Society, vol. 52(3), pages 541-561, May.
    3. Greg Kaplan & Giovanni L. Violante, 2014. "A Model of the Consumption Response to Fiscal Stimulus Payments," Econometrica, Econometric Society, vol. 82(4), pages 1199-1239, July.
    4. Scott R. Baker & Robert A Farrokhnia & Steffen Meyer & Michaela Pagel & Constantine Yannelis, 2023. "Income, Liquidity, and the Consumption Response to the 2020 Economic Stimulus Payments," Review of Finance, European Finance Association, vol. 27(6), pages 2271-2304.
    5. Matthew D. Shapiro & Joel Slemrod, 2009. "Did the 2008 Tax Rebates Stimulate Spending?," American Economic Review, American Economic Association, vol. 99(2), pages 374-379, May.
    6. Jonathan A. Parker & Nicholas S. Souleles & David S. Johnson & Robert McClelland, 2013. "Consumer Spending and the Economic Stimulus Payments of 2008," American Economic Review, American Economic Association, vol. 103(6), pages 2530-2553, October.
    7. Nicholas S. Souleles & Jonathan A. Parker & David S. Johnson, 2006. "Household Expenditure and the Income Tax Rebates of 2001," American Economic Review, American Economic Association, vol. 96(5), pages 1589-1610, December.
    8. Hilary Hoynes & Diane Whitmore Schanzenbach, 2015. "US Food and Nutrition Programs," NBER Chapters, in: Economics of Means-Tested Transfer Programs in the United States, Volume 1, pages 219-301, National Bureau of Economic Research, Inc.
    9. Natalie Cox & Peter Ganong & Pascal Noel & Joseph Vavra & Arlene Wong & Diana Farrell & Fiona Greig & Erica Deadman, 2020. "Initial Impacts of the Pandemic on Consumer Behavior: Evidence from Linked Income, Spending, and Savings Data," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(2 (Summer), pages 35-82.
    10. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-362, March.
    11. Broda, Christian & Parker, Jonathan A., 2014. "The Economic Stimulus Payments of 2008 and the aggregate demand for consumption," Journal of Monetary Economics, Elsevier, vol. 68(S), pages 20-36.
    12. Sumit Agarwal & Wenlan Qian, 2014. "Consumption and Debt Response to Unanticipated Income Shocks: Evidence from a Natural Experiment in Singapore," American Economic Review, American Economic Association, vol. 104(12), pages 4205-4230, December.
    13. Andreas Fuster & Matthew Plosser & Philipp Schnabl & James Vickery, 2019. "The Role of Technology in Mortgage Lending," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1854-1899.
    14. Justine Hastings & Ebonya Washington, 2010. "The First of the Month Effect: Consumer Behavior and Store Responses," NBER Chapters, in: Income Taxation, Trans-Atlantic Public Economics Seminar (TAPES), pages 142-162, National Bureau of Economic Research, Inc.
    15. Justine Hastings & Jesse M. Shapiro, 2018. "How Are SNAP Benefits Spent? Evidence from a Retail Panel," American Economic Review, American Economic Association, vol. 108(12), pages 3493-3540, December.
    16. Thomas Philippon, 2016. "The FinTech Opportunity," NBER Working Papers 22476, National Bureau of Economic Research, Inc.
    17. Sumit Agarwal & Chunlin Liu & Nicholas S. Souleles, 2007. "The Reaction of Consumer Spending and Debt to Tax Rebates-Evidence from Consumer Credit Data," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 986-1019, December.
    18. Sumit Agarwal & Yeow Hwee Chua, 2020. "FinTech and household finance: a review of the empirical literature," China Finance Review International, Emerald Group Publishing Limited, vol. 10(4), pages 361-376, May.
    19. Greg M. Allenby & Peter E. Rossi, 1991. "Quality Perceptions and Asymmetric Switching Between Brands," Marketing Science, INFORMS, vol. 10(3), pages 185-204.
    20. Igal Hendel, 1999. "Estimating Multiple-Discrete Choice Models: An Application to Computerization Returns," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(2), pages 423-446.
    21. Matthew D. Shapiro & Joel Slemrod, 2003. "Consumer Response to Tax Rebates," American Economic Review, American Economic Association, vol. 93(1), pages 381-396, March.
    22. Shapiro, Jesse M., 2005. "Is there a daily discount rate? Evidence from the food stamp nutrition cycle," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 303-325, February.
    23. Itay Goldstein & Wei Jiang & G Andrew Karolyi, 2019. "To FinTech and Beyond," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1647-1661.
    24. Francesco D’Acunto & Thomas Rauter & Christoph K. Scheuch & Michael Weber, 2020. "Perceived Precautionary Savings Motives: Evidence from FinTech," NBER Working Papers 26817, National Bureau of Economic Research, Inc.
    25. Hsieh, Chang-Tai & Shimizutani, Satoshi & Hori, Masahiro, 2010. "Did Japan's shopping coupon program increase spending?," Journal of Public Economics, Elsevier, vol. 94(7-8), pages 523-529, August.
    26. Kamhon Kan & Shin-Kun Peng & Ping Wang, 2017. "Understanding Consumption Behavior: Evidence from Consumers' Reaction to Shopping Vouchers," American Economic Journal: Economic Policy, American Economic Association, vol. 9(1), pages 137-153, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yingtong Chen & Fei Wu & Dayong Zhang & Qiang Ji, 2024. "Tourism in pandemic: the role of digital travel vouchers in China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    2. Henrika Langen & Martin Huber, 2022. "How causal machine learning can leverage marketing strategies: Assessing and improving the performance of a coupon campaign," Papers 2204.10820, arXiv.org, revised Jun 2022.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Qiao Liu & Qiaowei Shen & Zhenghua Li & Shu Chen, 2021. "Stimulating Consumption at Low Budget: Evidence from a Large-Scale Policy Experiment Amid the COVID-19 Pandemic," Management Science, INFORMS, vol. 67(12), pages 7291-7307, December.
    2. Kubota, So & Onishi, Koichiro & Toyama, Yuta, 2021. "Consumption responses to COVID-19 payments: Evidence from a natural experiment and bank account data," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 1-17.
    3. Bernard, René, 2023. "Mental accounting and the marginal propensity to consume," Discussion Papers 13/2023, Deutsche Bundesbank.
    4. María Pía Olivero & Mikheil Dvalishvili, 2023. "What do fiscal stimulus packages mean for household debt?," Contemporary Economic Policy, Western Economic Association International, vol. 41(2), pages 282-299, April.
    5. Cameron LAPOINT & UNAYAMA Takashi, 2020. "Winners, Losers, and Near-Rationality: Heterogeneity in the MPC out of a Large Stimulus Tax Rebate," Discussion papers 20067, Research Institute of Economy, Trade and Industry (RIETI).
    6. Fuchs-Schündeln, N. & Hassan, T.A., 2016. "Natural Experiments in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 923-1012, Elsevier.
    7. Kanishka Misra & Vishal Singh & Qianyun (Poppy) Zhang, 2022. "Frontiers: Impact of Stay-at-Home-Orders and Cost-of-Living on Stimulus Response: Evidence from the CARES Act," Marketing Science, INFORMS, vol. 41(2), pages 211-229, March.
    8. Gelman, Michael & Kariv, Shachar & Shapiro, Matthew D. & Silverman, Dan & Tadelis, Steven, 2020. "How individuals respond to a liquidity shock: Evidence from the 2013 government shutdown," Journal of Public Economics, Elsevier, vol. 189(C).
    9. Lucchetti, Riccardo & Pedini, Luca & Pigini, Claudia, 2022. "No such thing as the perfect match: Bayesian Model Averaging for treatment evaluation," Economic Modelling, Elsevier, vol. 107(C).
    10. Broda, Christian & Parker, Jonathan A., 2014. "The Economic Stimulus Payments of 2008 and the aggregate demand for consumption," Journal of Monetary Economics, Elsevier, vol. 68(S), pages 20-36.
    11. Campbell, J.R. & Hercowitz, Zvi, 2018. "Liquidity Constraints of the Middle Class (revision of CentER DP 2015-009)," Discussion Paper 2018-039, Tilburg University, Center for Economic Research.
    12. Martin Flodén & Matilda Kilström & Jósef Sigurdsson & Roine Vestman, 2021. "Household Debt and Monetary Policy: Revealing the Cash-Flow Channel," The Economic Journal, Royal Economic Society, vol. 131(636), pages 1742-1771.
    13. Hoon Choi, 2022. "Effect of COVID‐19 stimulus payments on sales of local small businesses: Quasi‐experimental evidence from Korea," Pacific Economic Review, Wiley Blackwell, vol. 27(4), pages 340-360, October.
    14. Arna Vardardottir & Michaela Pagel, 2016. "The Liquid Hand-to-Mouth: Evidence from a Personal Finance Management Software," 2016 Meeting Papers 789, Society for Economic Dynamics.
    15. Andreas Fagereng & Martin B. Holm & Gisle J. Natvik, 2021. "MPC Heterogeneity and Household Balance Sheets," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(4), pages 1-54, October.
    16. Agarwal, Sumit & Koo, Kang Mo & Qian, Wenlan, 2022. "Consumption response to temporary price shock: Evidence from Singapore's annual sale event," Journal of Financial Intermediation, Elsevier, vol. 51(C).
    17. Frederik Plesner Lyngse, 2020. "Liquidity Constraints and Demand for Healthcare: Evidence from Danish Welfare Recipients," Papers 2010.14651, arXiv.org.
    18. Benjamin J. Keys & Tomasz Piskorski & Amit Seru & Vincent Yao, 2014. "Mortgage Rates, Household Balance Sheets, and the Real Economy," NBER Working Papers 20561, National Bureau of Economic Research, Inc.
    19. Feng-Li Lin & Wen-Yi Chen, 2020. "Did the Consumption Voucher Scheme Stimulate the Economy? Evidence from Smooth Time-Varying Cointegration Analysis," Sustainability, MDPI, vol. 12(12), pages 1-16, June.
    20. Deniz Aydin, 2015. "The Marginal Propensity to Consume out of Liquidity," Discussion Papers 15-010, Stanford Institute for Economic Policy Research.

    More about this item

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejmac:v:15:y:2023:i:4:p:249-304. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.