There’s a debate in the comments to this post about whether recipients of tax rebates spend or save them. There’s no right answer. It’s an empirical question. I was just giving the intuition for why people might save rather than spend a windfall gain, given that most people just presume it will increase spending. I will try and give some more empirical evidence down the the road. Meanwhile, you might find this survey result about the rebates of 2001 of interest:
A poll by the Gallup organization recently asked around 1,000 adults how they would spend their rebate checks. Seventeen percent said they would spend the money,
while 47 percent said they’d use the cash to pay off bills. Thirty-two percent plan to save or invest it.
It’s only a survey. But I thought you’d find it interesting.
