IESET.
Hypotheses·distribution·chicago_permanent_income_consumption_smoothing_microdata

Across US household-panel microdata 1980-2019, the marginal propensity to consume out of income shocks identified as permanent (lasting >5 years; e.g.

job-displacement, persistent earnings change, permanent transfer programme enrolment) substantially exceeds the marginal propensity to consume out of identified-transitory income shocks (one-off rebates, lottery wins, predictable one-time tax refunds, severance windfalls). The pre-registered prediction is MPC(permanent) >= 0.7 and MPC(transitory) <= 0.3, with the gap preserved across income-tercile sub-samples but largest in the top two terciles. The hypothesis is the Friedman (1957) Permanent Income Hypothesis test on micro-data with explicit shock decomposition.

INCONCLUSIVEengine/runs/chicago_permanent_income_consumption_smoothing_microdata

INCONCLUSIVE_DATA_PENDING — no outcome variable loaded; missing: ['academic:psid_cex_consumption_microdata', 'academic:psid_cex_consumption_microdata']

confidence cueResult card produced; verdict unclassified.

policy briefCoverage too thin

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

This test cannot make a firm call yet. no outcome variable loaded; missing: ['academic:psid_cex_consumption_microdata', 'academic:psid_cex_consumption_microdata']

why it matters

Distributional claims often sound morally clear but are empirically complex. This test asks whether the proposed channel explains real differences across places.

how the test works

It compares 1 country or place units from 1980 to 2019, using a panel fe design, with fixed effects for household and year.

what was measured
What changed
  • Identified permanent income shock
  • Identified transitory income shock
What we checked
  • Nondurable consumption change
  • Total consumption change inc durables
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/chicago_permanent_income_consumption_smoothing_microdata
1007550250198020002019USA
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show nondurable_consumption_change across 1 sampled countries over 1980–2019.
The shapes above are stylised — none of the lines are real data.
Placeholder for chicago_permanent_income_consumption_smoothing_microdata. Published chart will be generated from engine/runs/chicago_permanent_income_consumption_smoothing_microdata/chart_data.json.

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:48:28Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

Across US household-panel microdata 1980-2019, the marginal propensity to consume out of income shocks identified as permanent (lasting >5 years; e.g. job-displacement, persistent earnings change, permanent transfer programme enrolment) substantially exceeds the marginal propensity to consume out of identified-transitory income shocks (one-off rebates, lottery wins, predictable one-time tax refunds, severance windfalls). The pre-registered prediction is MPC(permanent) >= 0.7 and MPC(transitory) <= 0.3, with the gap preserved across income-tercile sub-samples but largest in the top two terciles. The hypothesis is the Friedman (1957) Permanent Income Hypothesis test on micro-data with explicit shock decomposition.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Not supported if (a) MPC(permanent) is below 0.5, OR (b) MPC(transitory) exceeds 0.45 in the unconstrained sub-sample (assets above $1000), OR (c) the gap MPC(permanent) - MPC(transitory) is below 0.25 with bootstrap CI including zero. A behavioural / hand-to-mouth reading wins cleanly if MPC(transitory) >= 0.45 in the unconstrained sub-sample. A liquidity-constrained reading wins partially if MPC differences disappear in the bottom-tercile sub-sample (which the PIH does not require).

formal test & threshold
test:      kv_decomposition_mpc_permanent_vs_transitory_with_natural_experiments
threshold: MPC_permanent_unconstrained >= 0.7 with CI excluding 0.5 AND MPC_transitory_unconstrained <= 0.3 with CI excluding 0.45 AND gap >= 0.25 at p<0.05 AND result robust across CEX and PSID consumption measures separately

Method

Template
panel_fe
Fixed effects
household, year
Clustering
household
Sample
1 countries · 1980 – 2019
Evidence type
causal

Two-stage decomposition: (i) classify each income-change observation as permanent or transitory using Kaplan-Violante 2014 micro-shock decomposition + the natural-experiment events; (ii) regress consumption changes on permanent and transitory shock dollars separately, with household and year FE. Heterogeneity by pre-shock assets (Kaplan-Violante wealthy-hand-to-mouth test) reported as secondary spec. The Parker-Souleles-Johnson-McClelland 2001 and 2008 rebate quasi-experiments provide pre-registered transitory- shock identification.

Data

VariableSourceTransform
nondurable_consumption_change
outcome
academic:psid_cex_consumption_microdatatier 4
log_diff
total_consumption_change_inc_durables
outcome
academic:psid_cex_consumption_microdatatier 4
log_diff
identified_permanent_income_shock
treatment
academic:job_displacement_kaplan_violante_paneltier 4
dollar_pv_2020
identified_transitory_income_shock
treatment
academic:tax_rebate_natural_experimentstier 4
dollar_pv_2020
household_age_head
control
academic:psid_cex_consumption_microdatatier 4
integer_years
household_size
control
academic:psid_cex_consumption_microdatatier 4
integer
household_pre_shock_assets
control
academic:psid_cex_consumption_microdatatier 4
log_real_2020
state_unemployment_rate
control
bls:LAUST010000000000003tier 1
level
gdp_per_capita_real
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — chicago_permanent_income_consumption_smoothing_microdata

Verdict: INCONCLUSIVE_DATA_PENDING — no outcome variable loaded; missing: ['academic:psid_cex_consumption_microdata', 'academic:psid_cex_consumption_microdata']

Pre-registration

  • Claim: Across US household-panel microdata 1980-2019, the marginal propensity to consume out of income shocks identified as permanent (lasting >5 years; e.g. job-displacement, persistent earnings change, permanent transfer programme enrolment) substantially exceeds the marginal propensity to consume out of identified-transitory income shocks (one-off rebates, lottery wins, predictable one-time tax refunds, severance windfalls). The pre-registered prediction is MPC(permanent) >= 0.7 and MPC(transitory) <= 0.3, with the gap preserved across income-tercile sub-samples but largest in the top two terciles. The hypothesis is the Friedman (1957) Permanent Income Hypothesis test on micro-data with explicit shock decomposition.
  • Falsification rule: Not supported if (a) MPC(permanent) is below 0.5, OR (b) MPC(transitory) exceeds 0.45 in the unconstrained sub-sample (assets above $1000), OR (c) the gap MPC(permanent) - MPC(transitory) is below 0.25 with bootstrap CI including zero. A behavioural / hand-to-mouth reading wins cleanly if MPC(transitory) >= 0.45 in the unconstrained sub-sample. A liquidity-constrained reading wins partially if MPC differences disappear in the bottom-tercile sub-sample (which the PIH does not require).
  • Falsification test: kv_decomposition_mpc_permanent_vs_transitory_with_natural_experiments

Estimate

  • Error: no outcome variable loaded; missing: ['academic:psid_cex_consumption_microdata', 'academic:psid_cex_consumption_microdata']

Variables resolved

  • academic:tax_rebate_natural_experiments → identified_transitory_income_shock (treatment, publisher=constructed, n=40)
  • bls:LAUST010000000000003 → state_unemployment_rate (controls, publisher=bls, n=5)
  • world_bank_wdi:NY.GDP.PCAP.KD → gdp_per_capita_real (controls, publisher=world_bank_wdi, n=12104)

Variables missing data

  • academic:psid_cex_consumption_microdata (outcome, name=nondurable_consumption_change) — vintage not on disk
  • academic:psid_cex_consumption_microdata (outcome, name=total_consumption_change_inc_durables) — vintage not on disk
  • academic:job_displacement_kaplan_violante_panel (treatment, name=identified_permanent_income_shock) — vintage not on disk
  • academic:psid_cex_consumption_microdata (controls, name=household_age_head) — vintage not on disk
  • academic:psid_cex_consumption_microdata (controls, name=household_size) — vintage not on disk
  • academic:psid_cex_consumption_microdata (controls, name=household_pre_shock_assets) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:48:28+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Friedman 1957 (A Theory of the Consumption Function), Kaplan-Violante 2014 (Econometrica wealthy hand-to-mouth), Parker-Souleles-Johnson- McClelland 2013 AEJ on 2008 rebate, Imbens-Rubin-Sacerdote 2001 AER on lottery winners are the canonical references. The hypothesis as framed is a moderated PIH; the strict-PIH reading (MPC_transitory = 0) is already known to be falsified.

Authored framework. Read the transparency note.