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The economic and political debate over targeting the third round of stimulus checks is heating up -- so I wrote an explainer for @voxdotcom. https://www.vox.com/22270492/1400-stimulus-check-2000-income-inflation
Firstly, what are these checks for? Despite being officially named "Economic Impact Payments" everyone calls them stimulus checks.
But as @Noahpinion has discussed (and I tend to agree) it doesn't make a lot of sense to think of these as just stimulus. https://noahpinion.substack.com/p/covid-relief-isnt-stimulus-its-social
But as @Noahpinion has discussed (and I tend to agree) it doesn't make a lot of sense to think of these as just stimulus. https://noahpinion.substack.com/p/covid-relief-isnt-stimulus-its-social
But the stimulative effect is what @OppInsights' Ray Chetty, John Friedman, and Michael Stepner focus on in their analysis (which sources tell me has been read widely on Capitol Hill).
https://opportunityinsights.org/wp-content/uploads/2021/01/Oi_Secondstimulus_analysis.pdf
https://opportunityinsights.org/wp-content/uploads/2021/01/Oi_Secondstimulus_analysis.pdf
Their analysis finds that those making over $78,000 are spending much less of $600 checks than those making below that number.
As a result, they recommend targeting the $1400 checks to "save substantial resources that could be used to support other programs."
As a result, they recommend targeting the $1400 checks to "save substantial resources that could be used to support other programs."
Opp Insights is only predicts what people would spend in "month 1" however.
As @ProfJAParker pointed out to me in an email, the "analysis does not answer the question as to whether higher income people spend over a month instead of a few days."
As @ProfJAParker pointed out to me in an email, the "analysis does not answer the question as to whether higher income people spend over a month instead of a few days."
There are also questions regarding the data used, which @Claudia_Sahm has detailed extensively in her own post and I don't get into a ton in my piece. https://stayathomemacro.substack.com/p/who-should-get-a-1400-check
Another issue is that the existing academic literature on who spends rebates/checks/refunds like these finds that *liquidity* is more important than *income*.
That is, it's more important how much money you have in your bank account than what your salary is.
That is, it's more important how much money you have in your bank account than what your salary is.
So, you could end up missing people who need the money by targeting the checks to lower income brackets.
On this point, it's not clear that higher-income are just saving the money they get. In the @OppInsights analysis, they only have data on credit and debit card swipes!
On this point, it's not clear that higher-income are just saving the money they get. In the @OppInsights analysis, they only have data on credit and debit card swipes!
Importantly, it seems pretty clear that if the further targeting *does* happen, the counterfactual isn't $$ going to "support other programs" as Opp Insights folks want. It's just going to be cut. Is that preferable? The researchers didn't have an answer https://www.vox.com/22270492/1400-stimulus-check-2000-income-inflation
The political debate has centered a great degree on the question of "fairness". Last week, a bunch of lawmakers (Democrats and Republicans) bemoaned the idea of families making $300,000 getting stimulus checks which is a clever way to avoid the actual policy debate.
It's not a ton of money to be "saved", it's not clear at all that higher-income folks won't spent the money, and also it seems like a spectacular own-goal for your most visible part of your relief program to be reduced right after you won the Senate off the promise of checks 
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But it looks like Team Biden and lawmakers are seriously considering cutting the benefit. But as @JStein_WaPo has said repeatedly, the debate is very much live. https://www.vox.com/22270492/1400-stimulus-check-2000-income-inflation
