How to kick start an economy - the American way.

The US government have decided that the best way to boost the economy is to get the American public to spend more money. The Government has given each household a tax rebate, in many cases worth hundreds of dollars.

The new scientist* reports the findings of two scientists who suggest the plan is unlikely to have much impact. They took 140 students and asked them how they would spend various amounts of money. Students offered a $600 payment said that on average they would spend just $113, however if they received the payment in 12 monthly payments they would spend $420.

Other criticisms can include that the majority of recipients will either save the money or use it to pay off existing debts. Neither actions pumping the money into the economy. The final criticism is of course that it will hurt the government increasing national debt and lowering spending reserves.

All in all probably an inefficient way of spending tax dollars and breathing new life into the economy.

On a personal note I would agree with the findings of the study. If you gave me a lump sum I might pay off some debts or spend half of it on something nice and use the other to pay off debts or save it. If you gave me 12 payments I would not really notice it and just use it to up my general standard of living.

*This has been well publicised in the general media, but I don't have a link at the moment. However as a reference I can give you the New Scientist article which covers the story and Research. The Article "People of America: spend more of your money!" can be found in the 7 June 200 issue on page 15.