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Research on Consumption Vouchers

Jun 08-2020   



In an online academic seminar in late May to examine the impacts of the pandemic and identify solutions, Prof. Shen Yan of the NSD presented a report on consumption vouchers, followed by comments by Prof. Huang Yiping, Deputy Dean of the NSD.

 

To simulate demand, China have several options: cash, cash coupons, or consumption vouchers. Many local governments began to opt for consumption vouchers in March. Statistics from the Ministry of Commerce showed that by May 8th, more than 170 cities in 28 provinces had doled out consumption vouchers with accumulative value of over 19 billion yuan. Prof. Shen said that she and her colleagues finished the report by April 30th, with data collected from 36 cities by April 18th.

 

Despite wariness about consumption vouchers, her research team combed the practices in various countries and found that consumption vouchers issued in time of economic recession are effective in general, achieving marginal consumption tendency of 0.1-0.24.

 

Local governments mostly selected sectors that rely on offline consumption and fast cash turnover, including catering, tourism, supermarkets, and department stores. Digital technologies were used to deliver vouchers to local residents. Only 8% of vouchers were handed out offline. The vouchers can be characterized as being valid for only a short period, large in total value, and small in unit voucher value.

 

Using telecommunication and housing as control group – both of which were hardly included in voucher schemes in any city – department stores and supermarkets saw an impressive rebound in transactional quantity both online and offline in March and April. Some spending might have happened anyway. But further analysis shows that regions with vouchers did post 25% more transactional quantity than those without.

 

For policy advice, the report identifies a positive correlation between regional per capital GDP and probability in issuing vouchers, and no relationship is found to exist between the personal traits of local leaders and their impacts on vouchers issuance.

 

Prof. Huang commented that the research is of significant value and consumption vouchers are a very important trial and revolution. He raised questions about the effectiveness of vouchers, in particular if the money reaches the people in need. To avoid loss of efficiency, he preferred cash handouts.

Research on Consumption Vouchers

Jun 08-2020   



In an online academic seminar in late May to examine the impacts of the pandemic and identify solutions, Prof. Shen Yan of the NSD presented a report on consumption vouchers, followed by comments by Prof. Huang Yiping, Deputy Dean of the NSD.

 

To simulate demand, China have several options: cash, cash coupons, or consumption vouchers. Many local governments began to opt for consumption vouchers in March. Statistics from the Ministry of Commerce showed that by May 8th, more than 170 cities in 28 provinces had doled out consumption vouchers with accumulative value of over 19 billion yuan. Prof. Shen said that she and her colleagues finished the report by April 30th, with data collected from 36 cities by April 18th.

 

Despite wariness about consumption vouchers, her research team combed the practices in various countries and found that consumption vouchers issued in time of economic recession are effective in general, achieving marginal consumption tendency of 0.1-0.24.

 

Local governments mostly selected sectors that rely on offline consumption and fast cash turnover, including catering, tourism, supermarkets, and department stores. Digital technologies were used to deliver vouchers to local residents. Only 8% of vouchers were handed out offline. The vouchers can be characterized as being valid for only a short period, large in total value, and small in unit voucher value.

 

Using telecommunication and housing as control group – both of which were hardly included in voucher schemes in any city – department stores and supermarkets saw an impressive rebound in transactional quantity both online and offline in March and April. Some spending might have happened anyway. But further analysis shows that regions with vouchers did post 25% more transactional quantity than those without.

 

For policy advice, the report identifies a positive correlation between regional per capital GDP and probability in issuing vouchers, and no relationship is found to exist between the personal traits of local leaders and their impacts on vouchers issuance.

 

Prof. Huang commented that the research is of significant value and consumption vouchers are a very important trial and revolution. He raised questions about the effectiveness of vouchers, in particular if the money reaches the people in need. To avoid loss of efficiency, he preferred cash handouts.