The Effect of Fiscal Uncertainty on Household Expectations

Last registered on September 12, 2024
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Pre-Trial

Trial Information

General Information

Title
The Effect of Fiscal Uncertainty on Household Expectations
RCT ID
AEARCTR-0014267
Initial registration date
August 28, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
September 12, 2024, 4:47 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
United States of America
Region

Primary Investigator

Name
Penghui Yin
Affiliation
Central University of Finance and Economics
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Other Primary Investigator(s)

PI Name
Junjie Guo
PI Affiliation
Central University of Finance and Economics
Contact Investigator
PI Name
Li Tang
PI Affiliation
University of Reading
Contact Investigator
PI Name
Shihan Xie
PI Affiliation
University of Illinois at Urbana-Champaign
Contact Investigator

Additional Trial Information

Status
Completed
Start date
2024-01-10
End date
2024-01-17
Keywords
Behavior
Additional Keywords
Fiscal policy, uncertainty, randomized control trial, household spending
JEL code(s)
C83, E6, Z18
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Fiscal policy is popularly recognized as a key factor for household decisions. We employ randomized information treatments to induce exogenous changes in perceived fiscal policy uncertainty. In this project, we try to study how fiscal policy uncertainty affects household macroeconomic expectations and consumption-saving decisions.
External Link(s)

Registration Citation

Citation
Guo, Junjie et al. 2024. "The Effect of Fiscal Uncertainty on Household Expectations." AEA RCT Registry. September 12. https://doi.org/10.1257/rct.14267-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
During the treatment stage, all respondents are introduced to a hypothetical fiscal stimulus proposal put forth by the current federal government. This ensures that respondents consider the same fiscal proposal when making post-treatment predictions, thereby controlling for differing interpretations of the new fiscal plan. All respondents receive the following information regarding the impact of implementing the proposed fiscal plan on the future federal government spending growth. Then the control group is provided with the information that the plan is implemented now, but the treatment group is provided with the information that the plan will be likely postponed.
Intervention Start Date
2024-01-10
Intervention End Date
2024-01-17

Primary Outcomes

Primary Outcomes (end points)
Households' expectations about the growth rate of the governement spending, GDP growth rate, unemployment rate, interest rate, and tax rate in 12 months. Households' plans about durable goods consumption and saving.
Primary Outcomes (explanation)
We ask respondents to asign probabilities to bins regarding the growth rate of government spending. Then the mean and the variance about the governent spending growth rate is calculated by the asigned probability and the middle points of these bins.

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
1. Pre-treatment belief: in the beginning of the experiment, we ask respondents to report their beliefs about the government spending growth rate, and other macroeconomic variables.
2. Treatment: we provide two groups with the same information about the expanding government policy. For the control group, we tell them the policy is implemented now, but for the treatment group we tell them there is probability the policy will be cancelled.
3. Post-treatment belief: we ask respondents again their beliefs about the government spending growth rate and other macroeconomic variables, as well as consumption and saving plans.
Experimental Design Details
In the pre-treatment section, participants encounter two blocks of questions that elicit their beliefs about fiscal spending changes and other macroeconomic variables. In one block, we request respondents to provide probabilistic forecasts of changes in federal government spending over the upcoming 12 months. In the other block on macroeconomic variables, we seek respondents' one-year-ahead forecasts for each variable in a randomized order, alongside their confidence levels in these forecasts. The subsequent block contains three questions about how respondents plan their consumption and spending in a randomized order. Specifically, we ask respondents' ``best estimate'' regarding whether the next six months will be a good or bad time for purchasing durable goods. Additionally, we solicit whether they intend to increase or decrease spending on non-durable goods (food and leisure), as well as their estimated change in total expenditure over the next six months.

During the treatment stage, all respondents are introduced to a hypothetical fiscal stimulus proposal put forth by the current federal government. This ensures that respondents consider the same fiscal proposal when making post-treatment predictions, thereby controlling for differing interpretations of the new fiscal plan. All respondents receive the following information regarding the impact of implementing the proposed fiscal plan on the future federal government spending growth: If the US federal government implements this fiscal stimulus plan now, government spending will grow faster by approximately 3 percentage points over the next 12 months due to the implementation of this plan. The control group is presented with a scenario devoid of uncertainty and instructed as follows: Imagine the US federal government implements this plan now. The treatment group is presented with a scenario that incorporates uncertainty regarding plan implementation and reads: Imagine the US federal government is trying to implement this plan now. However, a new administration may lead to a reevaluation of priorities, potentially resulting in a shift away from the originally proposed fiscal stimulating plan.

After the information treatment, we prompt respondents to provide predictions to two blocks of questions concerning their expectations over the next 12 months, based on the information they received. One block entails forecasts of relevant macroeconomic variables in a randomized order and respondents' confidence in their forecasts. The other involves both point and probabilistic forecasts of the rate of change in fiscal spending. Next, we re-solicit their planned future consumption of non-durable goods. Finally, we collect additional data on a series of demographic questions, including financial literacy.
Randomization Method
randomization done in office by a computer
Randomization Unit
individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
2000 individuals
Sample size: planned number of observations
2000 individuals
Sample size (or number of clusters) by treatment arms
1000 individuals in the control group, 1000 individuals in the treatment group.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
middlesex university london research ethics committee
IRB Approval Date
2024-07-04
IRB Approval Number
N/A
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials