MPCs were directly elicited from a representative sample of UK adults in July 2020 using receipt of a hypothetical unanticipated, one-time income payment. 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 un-certainty. Further, the fraction of respondents that report they would change their transfer payments to or from family and friends is almost as large as the fraction that report they would increase their spending. This means that targeting direct ﬁscal stimulus payments to high-MPC individuals could be partly undone, and that the aggregate MPC out of a stimulus payment need not equal the population-average MPC.
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.
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 joined in 2009. He has published several papers on the microeconomics of household spending and labour supply decisions over the life-cycle.
Working Paper details
- The IFS
Crossley, T et al. (2021). 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-0 (accessed: 2 December 2023).
More from IFS
Understand this issue
2 November 2023
28 August 2023
13 July 2023
23 August 2023
Government publishes new evidence on impacts of income and job protection schemes during the pandemic
17 July 2023
14 August 2023
9 October 2023
1 August 2023