Your Stimulus Check Comes With a Moral Obligation

My friends and I have been talking about the $600 stimulus checks that the federal government is sending us, and the additional $1,400 possibly on the horizon. Thanks to jobs we were lucky to secure before the pandemic — and which we've been able to keep by working from home — we’ve been able to meet our needs throughout the year and still have money left to save. 

If the stimulus check was a gift from a relative or a bonus from an employer, most of us might use it to add to our savings or pay down credit-card debt. But this $600 feels different, and we’ve been thinking about the best way to use it.

Israel distributed stimulus checks ($220 per adult, $150 per child) to nearly all its citizens last year. In response, a grassroots campaign sprang up urging wealthier recipients to give their share to those who needed it more. The result? A survey by a private research group found that about 1 in 7 reported either donating the money or giving it to family or friends.  

In the U.S., the latest cash grant of $600 is not universal; it's aimed at individuals with incomes under $75,000. Many people will need the money to help pay bills. But what should those of us who don’t really need it do with our payment? 

Economic textbooks predict that cash-strapped households will spend the money on rent, food or bills, giving the macroeconomy a boost in the process. Those same textbooks predict that people in my position will save their payments — just like they'd do with leftover money from a paycheck. It doesn’t matter where the money came from. Surveys suggest that American households deployed the first round of $1,200 stimulus checks in just this way early last year. 

They weren’t wrong to do so. Building up savings is a crucial part of financial planning, especially for people under 25 (my generation). If you don’t have any savings, creating an emergency fund is a great use of the check. But those who already have an adequate financial backstop might consider the unusual nature, and purpose, of this small windfall. 

As a second (and possibly third) wave of checks arrive, what if recipients who can afford it choose to follow the example of those Israeli households? Perhaps because the stimulus checks in the U.S. aren’t as universal as the Israeli ones, there hasn’t been a widespread movement encouraging us to give them away — or at least to spend them as soon as possible on small businesses starved for customers. Yet the pandemic has both laid bare and deepened the inequities of our economy. Holding onto the money when we don’t really need it doesn’t feel right.  

One friend framed it as “doing our part” to help the fiscal stimulus work: If the check isn’t spent, it won’t give a boost to the economy. In this sense, contrary to the economics textbooks, we should  be influenced by the reason we’re getting these windfalls. They’re meant to help struggling Americans, and we have the ability to make the stimulus package do more for them by spending the full payment, or at least setting some of it aside to intentionally put back into the economy. 

If so, how and where should we spend the money? In macroeconomic terms, it doesn’t matter much. What I spend is someone else’s income. That said, money spent at a small, local business as opposed to ordering on could help prevent a pandemic-strained business from closing for good. What about $600 worth of restaurant takeout meals over the winter months, with generous tips included? Or buying gift cards from a local bookstore or salon?  

An even better idea might be to donate the money to a local food bank or clinic for the homeless. Many organizations like these need funding to respond to the pandemic as charitable giving has slowed down. Or we could put the stimulus money toward groups that work to change the longer-term, structural inequities that have made Covid-19’s effects so uneven.  

At the research institute where I work, we consider fiscal policy mostly from the bird’s-eye level: If the government puts $166 billion into households’ bank accounts, how much does GDP rise? What about the federal debt? But in recent weeks, these checks prompted more personal text and dinner table conversations with my friends about inequality, individual responsibility and patriotism. Our extra $600 feels like an opportunity to act on our ideals. 

Relying on households to redistribute stimulus money en masse to the most vulnerable is unrealistic. But at a time when so many are unable to meet basic needs, those of us who haven’t been hard hit economically by the pandemic should buck economists’ expectations by spending or giving our checks away posthaste. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Sophia Campbell is a research assistant in the Hutchins Center for Fiscal and Monetary Policy at the Brookings Institution.

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