MPCs through COVID: spending, saving and private transfers

Published on 20 October 2020

This Working Paper has been replaced by MPCs in an economic crisis: spending, saving and private transfers

This working paper looks at the marginal propensity to consume from a representative sample of UK adults in July 2020. Reported MPCs are low, around 11% on average. They are higher, but still modest, for individuals in households with high current needs.

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MPCs were directly elicited from a representative sample of UK adults in July 2020. Reported MPCs are low, around 11% on average. They are higher, but still modest, for individuals in households with high current needs. These low MPCs may be a consequence of the prevailing economic uncertainty. Some respondents report that they would respond to a one-time income payment by transferring more to friends and family, others report they would see a decline in the payments received. Targeting payments to high-MPC individuals could be partly undone. Further, the aggregate MPC out of a stimulus payment need not equal the population-average MPC, even if all individuals receive the same payment.

    Authors

    Hamish Low
    Hamish Low

    Research Fellow University of Oxford

    Hamish is the James Meade Professor of Economics at the University of Oxford, a Professorial Fellow of Nuffield College and a Research Fellow at IFS.

    Thomas Crossley
    Thomas F. Crossley

    Research Fellow University of Michigan

    Tom is a Research Fellow at IFS, a Research Professor for the Institute for Social Research at the University of Michigan.

    Peter Levell
    Peter Levell

    Deputy Research Director

    Peter joined in 2009. He has published several papers on the microeconomics of household spending and labour supply decisions over the life-cycle.

    Person graphic

    Paul Fisher

    Working Paper details

    DOI
    10.1920/wp.ifs.2020.3520
    Publisher
    The IFS

    Suggested citation

    Crossley, T et al. (2020). MPCs through COVID: spending, saving and private transfers. London: The IFS. Available at: https://ifs.org.uk/publications/mpcs-through-covid-spending-saving-and-private-transfers (accessed: 10 February 2025).

    Grant

    Centre for the Microeconomic Analysis of Public Policy (CPP), 2015-2020

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