During the 2020 COVID-19 recession, Israel disbursed one-time, universal grants of $220 per adult and $150 per child. We ask survey respondents about the grant’s primary effect on their situation. Twenty to 45 percent report increasing spending, and 36–52 percent report reducing debts. Importantly, as many respondents report donating or helping friends or family as increasing saving (10–18 percent). While financially weaker respondents reduce debt more, stronger ones not only increase saving but also increase giving — a new finding of nonnegligible, voluntary, decentralized reallocation of governmental assistance. We explore how Israel’s political situation and our methodology may have affected our findings, helped by a follow-up US survey.
Bibliographical noteFunding Information:
The authors thank Joel Slemrod, Claudia Sahm, and Jonathan Parker for generously sharing their original materials, survey scripts, and calculations; seminar participants at the University of Michigan, Bar Ilan University, the Hebrew University, and IDC Herzliya; Aharon Haver, Guy Ishai, Caleb Maresca, Doron Zamir, and Arjun Ramani for excellent research assistance; Israel’s National Economic Council and Prime Minister’s Office for funding the Israel survey; and Cornell’s S.C. Johnson Graduate School of Management for funding the US survey. The views expressed here are of the authors only; they have no financial or other material interests related to this research to disclose.
© 2022 National Tax Association. All rights reserved.
- fiscal policy
- marginal propensity to spend
- survey methodology
- universal transfers