The Impact of the 1972 Social Security Increase on Household Consumption

The 1972 Social Security benefit increase provides an opportunity to examine the consumption response to a large, permanent income increase. While prior research examined the labor supply response, the impact on consumption has generally been ignored. Using the 1972-73 Consumer Expenditure Survey, this project will examine whether consumption responded to the announcement and/or to the implementation of the benefit increase, and it will investigate the impact of the benefit increase on the composition of consumption.