CReAM Brown Bag seminar presented by Tuuli Paukkeri (VATT Institute for Economic Research)

Abstract: We study how the number of benefit payments within a month affects the consumption pattern of benefit recipients. In Finland, the payment dates of national pension benefits were based on the initial of the recipients' last name, whereas earnings-related pensions were paid at the beginning of the month. This generates as-good-as-random variation in payment dates and frequencies over the month for pensioners receiving both types of benefits, providing a clear and robust setup to analyse consumption behaviour. We find evidence that receiving benefits in a more dispersed manner leads to smoother monthly consumption choices. However, we don’t find any effects on the consumption of unhealthy goods such as alcohol, tobacco and gambling, or medicine expenses.