Revealed vs. Stated Preferences: A Meta-analysis of Marginal Propensity to Consume

• In Event: Behavioral Insights on Social Preferences and Consumption

Abstract

This paper investigates the potential impacts of fiscal policy by building on previous work by Sokolova (2023) on marginal propensity to consume (MPC). MPC is essential to understand consumer responsiveness to fiscal interventions. MPC estimates often come from studies that use data where consumption responses to known changes in income are observed; this data has been previously studied in the Sokolova (2023) meta-analysis. But aside from the revealed preference data, MPC estimates can be obtained from household surveys that ask consumers to report on their consumption response to an income change. These studies frequently investigate the impact of fiscal policy post hoc. There are many studies published in top journals that rely on this latter approach and, to our knowledge, have not ever been part of a meta-analysis. We plan to conduct a meta-analysis that offers a systematic comparison of estimates coming from these two data sources. We will use meta-regressions to compare findings on MPCs to see if the two methods consistently yield similar results, and if not, investigate the differences. If revealed and stated preference approaches provide equally meaningful data, they can be used interchangeably depending on data availability. On the other hand, if there are systematic differences across the two data sources, these differences must be pinned down and studied. In particular, we plan to explore whether the way survey questions are phrased systematically affects their perception by individuals and by extension the households’ survey responses.

Authors

• Merinda Zywicz, mzywicz@gmail.com

• Anna Sokolova, University of Nevada Reno