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How Government Workers Pinch Pennies During Shutdowns

Photo Credit: Jonathan Ernst/Reuters

Shachar Kariv’s recent study on consumption smoothing during the 2013 government shutdown has been discussed in an article by Gillian B. White of The Atlantic.

Loss of income, even temporarily, can be nerve-wracking. But couple it with an economic downturn that has left wages stagnant for years, meaning less savings to fall back on, and suddenly such an event can become an all-out disaster.

In economics, the process of trying to balance one’s level of spending and saving throughout periods of both feast and famine is known as consumption smoothing. A recent study from NBER takes a look at how federal employees managed and manipulated their finances during the 2013 government shutdown in an attempt to figure out how such “smoothing” works in reality.

 

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Professor Shachar Kariv
Professor Shachar KarivChief Scientist & Co-Founder