In response to the impact of the New Coronary Pneumonia epidemic, and to stimulate consumer recovery, more than 30 cities have recently issued billions of consumer coupons to citizens. At the same time, in response to the epidemic, the United States issued $ 1,200 in cash to adults of low- and middle-income families, and $ 500 in cash to children; Canada, the United Kingdom, Japan, South Korea, and Hong Kong, China also issued policies to issue cash to residents. In the face of the more direct “spread money” method of other countries or regions, many people are asking: Why don’t we directly find gold, but issue coupons?
Behavior Economics will give you the answer.
Subsidies are more effective than tax cuts to stimulate consumption
Subsidies are more effective than tax cuts to stimulate consumption
Behavior economics breaks through the assumption of “rational economic man” in traditional economics, emphasizing that people are not Completely rational, often affected by psychological factors in behavioral decision-making. Looking at a social experiment, I asked students three questions in class.
The first question: You bought a concert ticket for 800 yuan, but when you arrived at the entrance of the venue and found that 800 yuan was lost, you will also come in to watch ? Almost everyone said in unison that they would watch, after all, the ticket was still in hand.
Second question: You bought a concert ticket for 800 yuan, but when the ticket was found at the entrance of the venue, you will spend another 800 yuan to buy a ticket Come in and watch? At this time most people say no.
The third question: Suppose you plan to buy tickets at the venue. Before buying the tickets, you found that you lost 800 yuan, but you still have enough cash on your body, will you Buy tickets to see? In this case, some people will go, some people will not.
In essence, these three questions are all about one thing. They are all going to see a concert with a ticket price of 800 yuan. They lost 800 yuan before watching. Money or something worth 800 yuan should be regarded as this concert, and the cost is 1600 yuan. However, most people have very different choices in three situations. Because in the minds of most people, money is not the same as money. The 800 yuan is used to buy tickets, the 800 yuan is to pay the tuition for the children, all 800 yuan but have a different mission.
This is the important concept of behavioral economics proposed by Professor Nobel Prize winner Richard Seller: Psychological Account . According to the source of money, Different storage methods or payment methods, unconsciously classify and manage the original indistinguishable money, and affix different labels, such as hard-earned money, life-saving money, unexpected money, private house money, etc. The way to spend money with different tags is completely different. You should save money on hard-earned money. You can’t spend your life-saving money casually. Spend money on accidents. Spend money on private houses.
From the perspective of “psychological accounts”, it is easy to understand that subsidies are more conducive to stimulating consumption than tax cuts. Assuming a certain government to stimulate consumption, there are two policy options: one is to reduce the tax by 100 yuan for each resident; the other is to give 100 yuan to each resident. In the face of the 100 yuan saved by the tax cut, the residents will feel that “this is my hard-earned money”, so they put it back into the account called “sweat money” and will not spend money on it. In the face of a subsidy of 100 yuan, residents will feel that this is the “accidental wealth” the government gave me, so they are very happy to put in the “accidental wealth” account and go out to eat a meal and consume.
From the perspective of “psychological accounts”, it is easy to understand that subsidies are more conducive to stimulating consumption than tax cuts. Assuming a certain government to stimulate consumption, there are two policy options: one is to reduce the tax by 100 yuan for each resident; the other is to give 100 yuan to each resident. In the face of the 100 yuan saved by the tax cut, the residents will feel that “this is my hard-earned money”, so they put it back into the account called “sweat money” and will not spend money on it. In the face of a subsidy of 100 yuan, residents will feel that this is the “accidental wealth” the government gave me, so they are very happy to put in the “accidental wealth” account and go out to eat a meal and consume.
Therefore, in order to help enterprises survive in the early stage of the epidemic, the government introduced various policies “tax reduction and fee reduction”, and after the epidemic situation eased, in order to stimulate consumption and stimulate In the economy, local governments began to intensively provide subsidies to residents.
Improve consumption, and issue coupons are more effective than cash deposits.
Improve consumption, and issue coupons are more effective than cash deposits.
The problem goes further, since subsidies are more effective than tax cuts to stimulate consumption, issue consumption Both vouchers and discovery funds are subsidies. Why do foreign countries choose discovery funds, and why do all regions choose to issue consumption vouchers?
The primary difference is the different policy objectives resulting from the different stages of the outbreak. China has entered a stage where the domestic epidemic is basically under control and vigorously promotes consumption to stimulate economic growth. The policy objective is to stimulate consumption; while most foreign countries are still in the outbreak period, the policy objective is to protect the basic lives of residents, especially the unemployed. Taking the United States as an example, according to the Fed ’s survey, 40% of American households cannot afford emergency expenses of US $ 400, and must directly issue cash to guarantee the basic life of low- and middle-income families.
This difference between China and the US is essentially that Chinese residents have a stronger saving motive than the US and most countries. According to statistics from the International Monetary Fund (IMF), the savings rate of Chinese residents in 2018 was 36.8%, and the world average savings rate was 21.5%. The data released by the US Bureau of Economic Analysis shows that at the end of 2018, the US household savings rate was only 7.6%. So ifAfter issuing cash, American residents will go directly to supermarkets or restaurants to consume after receiving cash, while a considerable number of Chinese residents will deposit cash in banks.
From the perspective of “psychological accounts”, issuing coupons is more helpful than stimulus to stimulate consumption. I once asked a friend, “If the company rewards you 1,000 yuan in cash, what do you want to do with it?” He said, “I want to do whatever I want.” The question is “whatever I want to do.” “, The 1,000 yuan placed in the” accidental wealth “account may not be directly used for consumption, and may be saved for later. The issuance of consumer vouchers is different. Consumer vouchers often limit the scope of use. For example, they are suitable for different fields such as catering consumption, book purchase, and electronic product purchase. They require a certain amount of consumption before they can be used. This means that the residents who get the consumption vouchers will put them into the psychological account of catering and shopping very clearly, and actively consume to a certain amount to play the role of the consumption vouchers. According to the statistics of the Hangzhou Municipal Bureau of Commerce, the Hangzhou municipal government subsidized 66.95 million yuan with consumer coupons, driving consumption of 949 million yuan, and the multiplier effect is close to 15 times, and the effect is significant.
Conditions must be issued in order to stimulate consumption.
From the perspective of “psychological accounts”, issuing coupons is more helpful than stimulus to stimulate consumption. I once asked a friend, “If the company rewards you 1,000 yuan in cash, what do you want to do with it?” He said, “I want to do whatever I want.” The question is “whatever I want to do.” “, The 1,000 yuan placed in the” accidental wealth “account may not be directly used for consumption, and may be saved for later. The issuance of consumer vouchers is different. Consumer vouchers often limit the scope of use. For example, they are suitable for different fields such as catering consumption, book purchase, and electronic product purchase. They require a certain amount of consumption before they can be used. This means that the residents who get the consumption vouchers will put them into the psychological account of catering and shopping very clearly, and actively consume to a certain amount to play the role of the consumption vouchers. According to the statistics of the Hangzhou Municipal Bureau of Commerce, the Hangzhou municipal government subsidized 66.95 million yuan with consumer coupons, driving consumption of 949 million yuan, and the multiplier effect is close to 15 times, and the effect is significant.
Conditions must be issued in order to stimulate consumption.
In order to stimulate consumption, “conditions” should be issued in order to stimulate consumption . For example, when issuing coupons in multiple cities, appointments or panic purchases are set from 0:00, and the appointment period is limited, and some need to pass the “sign lottery”. Some people asked why it was not easy to distribute one to everyone. In addition to the fact that the total amount of vouchers is difficult to cover everyone, there is another important reason. Not everyone needs vouchers. For those high-income groups who are more concerned about their time and relatively insensitive to prices, the presence or absence of vouchers has little effect on their consumption. Therefore, it is necessary to set up conditions to accurately distribute consumer vouchers to price-sensitive consumers to better stimulate consumption. This is the same as the logic of spending time on platforms such as Pinduoduo to find someone to fight for orders and bargain prices to enjoy low prices.
In addition to these conventional conditions, some cities require that they receive rewards through rewards and answers. For example, the Nantong Federation of Trade Unions launched an online answering activity, and after correctly answering the relevant questions related to epidemic prevention and control, they can receive consumer vouchers. Some people say that it is not complicated any more and affects the policy effect. In fact, this is more conducive to the accurate landing of consumer coupons.
Give an example. The unit rewarded employees and issued a concert ticket worth 800 yuan. There was a snowstorm on the day of the concert and the road surface was extremely poor. If you want to go to the concert, you must brave the snowstormWill you go in half an hour? Many people told me not to go, the snow is too big.
This concert is also a snowstorm, but the tickets were bought in line for 800 yuan. Will you go? Many people told me that they had to go, because the tickets were bought in line by themselves!
sounds very reasonable, but also in line with most people ’s choice. But calm down and think about it, what should be the influencing factors of going to the concert in a blizzard? It is a trade-off between the enjoyment of a concert and the cost of a snowstorm. If you think the enjoyment of listening to a concert exceeds the cost of a blizzard, go;
But we found that when most people face this problem, they do not focus on the comparison of the two, but focus on Well, did you buy the tickets yourself? If you buy it yourself, you will feel heartache if you don’t go; if it is issued by the unit, it does not matter, and your heart will not hurt.
This is the “sunken cost fallacy” in behavioral economics. Sunk costs refer to costs that occurred in the past and cannot be recovered no matter what you do now or in the future, such as queuing up to buy tickets. Traditional economic theory tells us that sunk costs are irrecoverable and therefore should not be considered in decision-making. But in fact, people not only look at whether this matter is good for themselves when making decisions, but also consider whether they have invested in the past, always indulge in the past, and are difficult to extricate themselves, thus falling into the “sunken cost fallacy.”
Answering online questions is to increase the “sinking cost” of consumer coupons. Theories of people who grab the vouchers theoretically use the vouchers to consume are similar, but in fact, because the “sunken cost fallacy” is difficult to overcome, those who spend more time to grab the vouchers will cherish this more Opportunity, “I have paid so much to grab the voucher, I have to spend it well!” So, “Sinking cost fallacy” will stimulate stronger consumption motivation.
In summary, affected by the “psychological account” and “sunken cost fallacy”, in stimulating consumption, subsidies are more effective than tax cuts, and consumer coupons are issued It is more effective than cash, especially the conditional issuance of consumer coupons, which is better.
(Author Ge Yuyu is a teacher of Shanghai National Accounting Institute, PhD in Economics)