Do Consumers React to Anticipated Income Changes? Evidence from the Alaska Permanent Fund
Open Access
- 1 February 2003
- journal article
- Published by American Economic Association in American Economic Review
- Vol. 93 (1) , 397-405
- https://doi.org/10.1257/000282803321455377
Abstract
Change their consumption paths when the com- putational costs involved are large relative to the utility gains. In support of this interpreta- tion, Browning and Collado (2001) find that the seasonal consumption patterns of Spanish households that work in sectors that provide regular bonus payments do not differ from those of households that do not receive bonus payments. This paper adds to this evidence by exploiting a natural experiment provided by annual pay- ments from the state of Alaska's Permanent Fund to every resident in the state of Alaska that should yield an unusually powerful test of the LC/PIH. These payments are large and clearly anticipated by Alaskan residents.3 Using the variation in the size of the payments over timeKeywords
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