Lorenz Kueng, Universtá della Svizzera Italiana
Anticipatory Spending: Classifying Consumer Types with Pre-Payment MPCs
Abstract
We quantify consumption heterogeneity by jointly estimating novel pre-payment MPCs – spending increases before payment arrival – and traditional post-payment MPCs, leveraging multiple pre-announced income changes per individual from various fiscal policies. We find that these MPCs exhibit higher within-individual persistence than one would expect from models that feature ex-ante identical individuals with ex-post heterogeneity from realized shock histories. Building on this idea of persistent characteristics, we use k-means clustering to assign individuals into one of four distinct consumer types: Active savers with positive but moderate pre- and post-MPCs (about 45% of the sample), passive savers with near-zero pre- and post-MPCs (22%), passive spenders with high post- but near-zero pre-MPCs (24%), and active spenders with high pre- and post-MPCs (9%). Finally, we use additional moments untargeted by the algorithm (e.g., liquidity, event salience, transfer size) to map each consumer type to established consumption models, such as canonical buffer-stock behavior, inattention, mental accounting, and present bias.
Prof. Lorenz Kueng joined the economics department of USI in 2019. He earned a PhD in Economics from the University of California, Berkeley in 2012, both Bachelor and Masters degrees in economics and mathematics from the University of Fribourg in 2005, and a diploma in economics from the Swiss National Bank's Study Center Gerzensee in 2006.
Before joining USI, he was an Assistant Professor of Finance at the Kellogg School of Management at Northwestern University in Chicago, a Faculty Research Fellow of the National Bureau of Economic Research (NBER) in Boston, and served as a Research Economist at the Federal Reserve Bank of Chicago. He is a Research Affiliate of the Center for Economic Policy Research (CEPR) in London and a Faculty Member of the Swiss Finance Institute (SFI).
His research focuses on household economics and finance, public finance, and applied macroeconomics. His latest research investigates the risk of owning versus renting housing, the consumption response of households to unconditional cash transfers, and how borrowing constraints affected the effectiveness of fiscal policies in stimulating the economy during the financial crisis. His research has been published in leading economics, finance, and management journals, such as the Quarterly Journal of Economics, the Review of Financial Studies, the Journal of Financial Economics, Management Science, the Journal of Monetary Economics, or the Journal of Public Economics.
His work has also been cited and discussed in various media outlets such as The Economist, The Financial Times, The New York Times, Bloomberg, CBS News, Slate.com, CentralBanking.com, Vox, Die Neue Zürcher Zeitung, or Das Handelsblatt.
You can read more about Lorenz Kueng here
CEBI contact: Asger Lau Andersen