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Eliciting the Marginal Propensity to Consume in Surveys

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Abstract

Different methods of eliciting the marginal propensity to consume give very different distributions. Mean MPCs range from below 0.1, indicating life-cycle consumers, to over 0.5, consistent with consumers being hand-to-mouth. We conducted a randomized survey experiment to test if this difference arises because of question wording: we compare using a direct question and a filtered question. Survey wording has large effects on (1) the mean MPC, (2) the extensive margin, and (3) how MPCs vary with payment size, spending horizon, and liquidity. MPCs elicited using a filtered question are much closer to results from using a covariance restriction approach.

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  • Thomas F. Crossley & Paul Fisher & Peter Levell & Hamish W. Low, 2026. "Eliciting the Marginal Propensity to Consume in Surveys," Working Paper Series WP 2026-04, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhwp:103281
    DOI: 10.21033/wp-2026-04
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    1. Tal Gross & Matthew J. Notowidigdo & Jialan Wang, 2020. "The Marginal Propensity to Consume over the Business Cycle," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(2), pages 351-384, April.
    2. Johannes Boehm & Etienne Fize & Xavier Jaravel, 2025. "Five Facts about MPCs: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 115(1), pages 1-42, January.
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    8. Thomas Crossley & Paul Fisher & Peter Levell & Hamish Low, 2021. "MPCs in an economic crisis: spending, saving and private transfers," IFS Working Papers W21/26, Institute for Fiscal Studies.
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    Keywords

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    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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