Financial behavior and uncertain tax refunds: a new test of precautionary saving among low-income households

Project Summary:

This research seeks to better understand how readily low-income households spend an extra dollar of income by utilizing a novel quasi-experimental design based on the uncertainty of tax refunds. A better understanding of the marginal propensity to consume at the bottom of the income distribution has important implications for the design of fiscal stimulus and unemployment insurance systems, as well as the tax system.


Scott Nelson is a fourth-year Ph.D. student in economics at MIT. His research focuses on consumer credit markets, in particular on how regulation interacts with information asymmetries, and how households make choices about borrowing, deleveraging, and default. Nelson is a research fellow with the City of Boston Office of Financial Empowerment, a graduate intern with the Consumer Financial Protection Bureau, a visiting graduate fellow with the Federal Reserve Bank of Boston, and a National Science Foundation Graduate Research Fellow.

Before MIT, Nelson worked as a research assistant at the Federal Reserve Bank of New York, and at Innovations for Poverty Action’s Household Finance Initiative. He received a B.A. in economics and mathematics from Yale University, summa cum laude, where he received the Ellington Prize for best senior essay in finance and the Stanley Memorial Prize for excellence in mathematics.