Spending Responses to Direct Cash Assistance to Low-Income Adults

Abstract This paper examines individuals’ use of one-time direct cash assistance of $1,400 provided to over 2000 low-income individuals in 2022. Survey results demonstrate that nearly all recipients paid down debt or spent the assistance; very few recipients saved the check. This result differs from broad-based one-time assistance payments but is consistent with other assistance payments provided to low-income individuals. The main categories of spending are recurring bills, debt payments, food, housing or auto repairs, and transportation. The estimated marginal propensity to consume is 0.69. Individuals’ use of the assistance was primarily associated with household debt prior to receiving the assistance.