IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Segmenting consumers based on how they spend a tax rebate: An analysis of the Australian stimulus payment

  • Oppewal, Harmen
  • Paas, Leonard J.
  • Crouch, Geoffrey I.
  • Huybers, Twan

Tax rebates are instruments for stimulating consumer spending during recessions. Previous research assessed whether consumers use tax rebates for saving or, alternatively, purchasing goods and services. These studies concentrated on aggregate estimations. Based on the saving motive hierarchy suggested in the economic psychology literature, other theories on saving motives, and acquisition pattern analysis, we propose that consumers can be segmented by the purposes for which they use a tax rebate. We apply Latent Class Analysis to segment consumers in Australia according to their allocation of the 2009 government rebate, which was paid as a tax bonus, across a broad set of expenditure categories. The analysis reveals segments with different spending patterns, including segments we have labeled as 'investors', 'travelers', 'debt-payers', and four other segments. Segment membership is explained using a mix of socio-demographic variables, annual category expenditures, and psychological factors (materialism and consumer confidence). We discuss theoretical implications as well as managerial implications for policymakers and marketing.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 31 (2010)
Issue (Month): 4 (August)
Pages: 510-519

in new window

Handle: RePEc:eee:joepsy:v:31:y:2010:i:4:p:510-519
Contact details of provider: Web page:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. David S. Johnson & Jonathan A. Parker & Nicholas S. Souleles, 2004. "Household Expenditure and the Income Tax Rebates of 2001," Working Papers 136, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics..
  2. Paas, Leonard J., 1998. "Mokken scaling characteristic sets and acquisition patterns of durable- and financial products," Journal of Economic Psychology, Elsevier, vol. 19(3), pages 353-376, June.
  3. Lindqvist, Alf, 1981. "A note on determinants of household saving behavior," Journal of Economic Psychology, Elsevier, vol. 1(1), pages 39-57, January.
  4. Martin Browning & Annamaria Lusardi, 1995. "Household Saving: Micro Theories and Micro Facts," Department of Economics Working Papers 1995-02, McMaster University.
  5. Loibl, Cäzilia & Hira, Tahira K., 2009. "Investor information search," Journal of Economic Psychology, Elsevier, vol. 30(1), pages 24-41, February.
  6. Van Raaij, W. Fred & Gianotten, Henk J., 1990. "Consumer confidence, expenditure, saving, and credit," Journal of Economic Psychology, Elsevier, vol. 11(2), pages 269-290, June.
  7. Vermunt, Jeroen K. & Magidson, Jay, 2003. "Latent class models for classification," Computational Statistics & Data Analysis, Elsevier, vol. 41(3-4), pages 531-537, January.
  8. Matthew D. Shapiro & Joel Slemrod, 2001. "Consumer Response to Tax Rebates," NBER Working Papers 8672, National Bureau of Economic Research, Inc.
  9. Gunnarsson, Jonas & Wahlund, Richard, 1997. "Household financial strategies in Sweden: An exploratory study," Journal of Economic Psychology, Elsevier, vol. 18(2-3), pages 201-233, April.
  10. Fisher, Patti J. & Montalto, Catherine P., 2010. "Effect of saving motives and horizon on saving behaviors," Journal of Economic Psychology, Elsevier, vol. 31(1), pages 92-105, February.
  11. Sumit Agarwal & Chunlin Liu & Nicholas S. Souleles, 2007. "The reaction of consumer spending and debt to tax rebates – evidence from consumer credit data," Working Paper Series WP-07-10, Federal Reserve Bank of Chicago.
  12. Fernandez-Blanco, Victor & Orea, Luis & Prieto-Rodriguez, Juan, 2009. "Analyzing consumers heterogeneity and self-reported tastes: An approach consistent with the consumer's decision making process," Journal of Economic Psychology, Elsevier, vol. 30(4), pages 622-633, August.
  13. Prinzie, Anita & Van den Poel, Dirk, 2006. "Investigating purchasing-sequence patterns for financial services using Markov, MTD and MTDg models," European Journal of Operational Research, Elsevier, vol. 170(3), pages 710-734, May.
  14. Chambers, Valrie & Spencer, Marilyn, 2008. "Does changing the timing of a yearly individual tax refund change the amount spent vs. saved?," Journal of Economic Psychology, Elsevier, vol. 29(6), pages 856-862, December.
  15. Richins, Marsha L & Dawson, Scott, 1992. " A Consumer Values Orientation for Materialism and Its Measurement: Scale Development and Validation," Journal of Consumer Research, University of Chicago Press, vol. 19(3), pages 303-16, December.
  16. Lemmens, A. & Croux, C. & Dekimpe, M.G., 2007. "Consumer confidence in Europe : United in diversity," Other publications TiSEM ea8c3268-2c0b-4fcc-9d4a-6, Tilburg University, School of Economics and Management.
  17. Bijmolt, T.H.A. & Paas, L.J. & Vermunt, J.K., 2004. "Country and consumer segmentation : Multi-level latent class analysis of financial product ownership," Other publications TiSEM fb506162-d125-4091-9083-9, Tilburg University, School of Economics and Management.
  18. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
  19. Leonard Paas & Klaas Sijtsma, 2008. "Nonparametric item response theory for investigating dimensionality of marketing scales: A SERVQUAL application," Marketing Letters, Springer, vol. 19(2), pages 157-170, June.
  20. repec:ner:tilbur:urn:nbn:nl:ui:12-194296 is not listed on IDEAS
  21. Kasulis, Jack J & Lusch, Robert F & Stafford, Edward F, Jr, 1979. " Consumer Acquisition Patterns for Durable Goods," Journal of Consumer Research, University of Chicago Press, vol. 6(1), pages 47-57, June.
  22. Sheppard, Blair H & Hartwick, Jon & Warshaw, Paul R, 1988. " The Theory of Reasoned Action: A Meta-analysis of Past Research with Recommendations for Modifications and Future Research," Journal of Consumer Research, University of Chicago Press, vol. 15(3), pages 325-43, December.
  23. Paas, L.J. & Bijmolt, T.H.A. & Vermunt, J.K., 2007. "Acquisition patterns of financial products : A longitudinal investigation," Other publications TiSEM 6e60376b-b689-4e76-93b8-5, Tilburg University, School of Economics and Management.
  24. Stafford, Edward Jr. & Kasulis, Jack J. & Lusch, Robert F., 1982. "Consumer behavior in accumulating household financial assets," Journal of Business Research, Elsevier, vol. 10(4), pages 397-417, December.
  25. Nicholas S. Souleles, 1999. "The Response of Household Consumption to Income Tax Refunds," American Economic Review, American Economic Association, vol. 89(4), pages 947-958, September.
  26. Souleles, Nicholas S., 2002. "Consumer response to the Reagan tax cuts," Journal of Public Economics, Elsevier, vol. 85(1), pages 99-120, July.
  27. Paas, Leonard J. & Bijmolt, Tammo H.A. & Vermunt, Jeroen K., 2007. "Acquisition patterns of financial products: A longitudinal investigation," Journal of Economic Psychology, Elsevier, vol. 28(2), pages 229-241, April.
  28. Erskine, Michele & Kier, Cheryl & Leung, Ambrose & Sproule, Robert, 2006. "Peer crowds, work experience, and financial saving behaviour of young Canadians," Journal of Economic Psychology, Elsevier, vol. 27(2), pages 262-284, April.
  29. Watson, John J., 2003. "The relationship of materialism to spending tendencies, saving, and debt," Journal of Economic Psychology, Elsevier, vol. 24(6), pages 723-739, December.
  30. Canova, Luigina & Rattazzi, Anna Maria Manganelli & Webley, Paul, 2005. "The hierarchical structure of saving motives," Journal of Economic Psychology, Elsevier, vol. 26(1), pages 21-34, February.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:joepsy:v:31:y:2010:i:4:p:510-519. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.