After Across-the-Board Decline, Consumer Spending
Has Rebounded Fastest for Low-Income Households

Consumer purchases in late March 2020 were more than 35 percent lower than in the same period the previous year, according to detailed data on household credit and debit card charges and banking transactions. While the drop occurred in all income groups, and all groups subsequently recovered, by late May, spending by those in the lowest income quartile was only 10 percent lower than a year earlier, while spending by highest quartile households remained down by over 20 percent. Faculty Research Fellows Peter Ganong, Joseph Vavra, and Arlene Wong, and their collaborators Natalie Bachas, Diana Farrell, Fiona Greig, and Pascal Noel, report these findings, and also document a sharp increase in liquid balances for many households, in a recent working paper (27617). Wong summarizes their findings in the short video above.

Five NBER working papers distributed this week examine the economic impact of the COVID-19 pandemic and various policy responses to it. The studies analyze how the $600 unemployment insurance supplement in the CARES Act affected consumer spending (27576), present cross-country evidence on the effect of programs designed to keep businesses afloat through the pandemic (27637), estimate the impact on restaurant traffic of lifting lockdown provisions (27650), explore the role of fintech firms as substitutes for traditional banks in serving firms that benefit from the Paycheck Protection Program (27659), and describe gender-related differences in the pandemic’s labor market effects (27660).

More than 210 NBER working papers have presented pandemic-related research. These papers are open access and have been collected for easy reference. View them in reverse chronological order or by topic area.

New NBER Research

11 August 2020

Informality, Consumption Taxes, and Redistribution

In a study of spending patterns in 31 countries, the personal budget share spent in the informal sector steeply declines at higher income levels, according to Pierre Bachas, Lucie Gadenne, and Anders Jensen. This makes consumption taxes on goods purchased in the formal sector progressive, in that households in the richest quintile face an effective tax rate twice that of the poorest quintile.

10 August 2020

Private Equity, New Products, and Greater Sales

Following a buyout, target firms increase sales 50 percent more than matched control firms, primarily by launching new products and expanding geographically into new markets, a study by Cesare Fracassi, Alessandro Previtero, and Albert W. Sheen finds.

7 August 2020

Home Price Beliefs and Time-to-Sell

In a field experiment with 57,910 US homeowners who recently put their houses on the market, Nicolas L. Bottan and Ricardo Perez-Truglia find that a 1 percentage point increase in the seller’s home price expectations was associated with a 2.5 percentage point decline in the probability of selling the home within six months.
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Bulletin on Retirement and Disability

An Introduction to Current Research by Fellows in
NBER Retirement and Disability Research Center

The NBER Retirement and Disability Research Center has two competitive training programs for junior scholars, funded through a cooperative agreement with the Social Security Administration. An overview of the program and an introduction to current fellows’ research is featured in the current issue of the Bulletin on Retirement and Disability. Also in this issue are a summary of how bill and benefit timing affects low-income and elderly people’s finances, a summary of how student loan forgiveness affects disability insurance application, and a study of the effectiveness of state-level sick pay mandates.
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2020 Summer Institute Methods Lectures

The 2020 Methods Lectures introduce differential privacy, a method of assessing the trade-off between releasing more-detailed information based on survey responses and protecting respondents' privacy, and illustrate its application in several settings. The lectures and associated slides are available to view online or download.

The NBER Digest

US Consumer Price Index Does Not Reflect Changes
in Spending Patterns Induced by the Pandemic

Since the onset of the COVID-19 pandemic, Americans are eating at home more and moving around less — changes that are not reflected in the Consumer Price Index weightings of important spending categories, and which could mean US inflation is being understated, according to a study summarized in the August edition of The NBER Digest. Also featured in this issue of The Digest are working papers focusing on long-term outcomes of efforts to mandate equality in China, the environmental-justice effects of California’s carbon market, benefits for the very young of food-stamp availability, reactions of diners to having calorie data posted on menus, and the role of fear of COVID-19 in suppressing economic activity.
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The NBER Reporter

Exploring the Changes that Digitization Has Brought
to Many Facets of Business, Media, and Personal Life

The new edition of the quarterly NBER Reporter features a review of research in the framework of the NBER’s decade-long project on the Economics of Digitization. Also in this issue of the Reporter, NBER research associates write about their explorations of behavioral biases among analysts and investors, health care delivery in conditions of uncertainty, tax credit impacts on corporate behavior, and medical spending and savings in elderly households.
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Bulletin on Health

What Can We Learn About COVID-19 Infection Rates
and Infection Fatality Rates Without Randomized Testing?

The summer issue of the Bulletin on Health features two studies that introduce methods for using currently available information to better understand COVID-19 infection rates and the implied infection fatality rates. One paper generates upper and lower bounds on the rates of COVID-19 infection under minimal assumptions, and finds that these bounds are necessarily wide, due to the small proportion of the population that has been tested. The second paper leverages additional assumptions and data, such as travel patterns from the virus epicenters, to infer infection rates. Although the studies take different approaches, they both indicate that infection fatality rates are considerably lower than the fatality rates among confirmed COVID-19 cases. Also featured in this issue of the free Bulletin on Health are a study of the long-term impacts of OxyContin’s reformulation on fatal drug overdoses, a study of the role of Medicaid coverage in reducing infant mortality during flu pandemics, and a profile of NBER research associate Doug Almond.
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