Almost half of American families did not adjust their consumption following receipt of the 2001 or 2008 tax rebates. Another 20 percent, with low income and more likely to rent, spent a small but significant amount. Households with large spending propensity held high levels of mortgage debt. The heterogeneity is concentrated in a few nondurable categories and a handful of "new vehicle" purchases. The cumulated predictions of the heterogeneous response model tend to be smaller and more accurate than their homogeneous response model counterparts, offering new insights on the evaluation of the two fiscal stimulus programs. (JEL D12, D91, E21, E32, E62) "When a full analysis of heterogeneity in responses was made [in microeconometric investigations], a variety of candidate averages emerged to describe the 'average' person, and the long-standing edifice of the representative consumer was shown to lack empirical support." -James J. Heckman (2001, p. 674) "We may expect to see that integrating individual coefficients [from models of heterogeneous responses] yields roughly mean effect as estimated by the associated least-squares coefficient. One should be cautious, however, about this interpretation in very heterogeneous situations." -Roger Koenker (2005, p. 302) In the aftermath of the recent financial crisis, governments around the world have sought to support the economy through unprecedented fiscal interventions. Considerable uncertainty (and disagreement among economists) exists, however, around the impact of these policies. At the heart of this uncertainty lays the recognition that the effects of fiscal policies on the aggregate economy cannot be fully understood without explicit consideration of distributional dynamics. This important insight feeds into a growing macroeconomic literature which explicitly recognizes that consumers and entrepreneurs are inherently different in their access to
Do mundane daily choices, such as what brands people buy in a supermarket, reflect aspects of values and ideologies? This article presents a large-scale field study performed to determine whether traits associated with a conservative ideology, as measured by voting behavior and religiosity, are manifested in consumers' routine, seemingly inconsequential product choices. Our analysis of market shares for a variety of frequently purchased products shows that both of these measures of conservatism are associated with a systematic preference for established national brands (as opposed to their generic substitutes) and with a lower propensity to buy newly launched products. These tendencies correspond with other psychological traits associated with a conservative ideology, such as preference for tradition and the status quo, avoidance of ambiguity and uncertainty, and skepticism about new experiences.
Many online content providers aim to compensate for a loss in advertising revenues by charging consumers for access to content. However, such a choice is not straightforward because subscription fees typically deter customers and a resulting decline in viewership further reduces advertising revenues. This research examines whether firms that offer both free and paid content can benefit from adjusting the amount of content offered for free. We find that firms should offer more free-and not paid-content in periods of high demand. We motivate theoretically that this policy which we term 'counter-cyclical offering' may be optimal for firms when consumers are heterogeneous in their valuation of online content, this heterogeneity varies over time, and more so for low consumer types than for high types. Using unique data from an online content provider, we then provide empirical evidence that firms indeed engage in counter-cyclical offering and increase the share of free content in periods of high demand.
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