Government’s Stimulus Program to Boost Consumer Spending: A Case of Discount Shopping Coupon Scheme in Japan

Yoshihiko Kadoya,Mostafa Saidur Rahim Khan,Tomomi Yamane

doi:10.3390/su12093906

Abstract

The unprecedented outbreak of COVID-19 has triggered a worldwide economic recession. Consequently, governments are pursuing different stimulus packages to alleviate the resulting pressures. This study examines one such program intended to enhance consumer spending during an economic downturn. In 2015, the Japanese government implemented a discount shopping coupon scheme, offering a 20% discount on purchases. This study aims to identify the groups of consumers who responded most to the discount shopping coupon scheme. To this end, we examine the demographic and socio-economic factors associated with the purchasers of discount shopping coupons in Hiroshima Prefecture, Japan. Using IV probit models, we show that middle-aged people, homemakers, household balance of financial assets, and short-term attitude are positively associated with the purchase of the coupons. Financial literacy reflects a negative association with the purchase of the coupons for respondents over the age of 40, whereas household income shows a positive association for middle-aged respondents. Our results imply that programs designed to improve consumer consumption may not be effective as blanket solutions that are applied to everyone indiscriminately, but rather seem to show efficiency when tailored to different people according to their demographic and/or socio-economic characteristics.

Highlights

To date, the world has been experiencing an unprecedented economic downturn due to the COVID-19 pandemic [1]
We studied the discount shopping coupon scheme implemented in Japan during a period of economic stagnation, after its economic bubble burst in 2000, to understand how this economic stimulus program could be helpful for other countries
We examine the demographic and socio-economic factors associated with the purchasers of discount shopping coupons

Summary

Introduction

The world has been experiencing an unprecedented economic downturn due to the COVID-19 pandemic [1]. Numerous countries have implemented various economic stimulus programs to overcome this situation. A discount shopping coupon scheme, for instance, is thought to be potentially effective in increasing consumer spending in countries where an economic downturn is projected. We studied the discount shopping coupon scheme implemented in Japan during a period of economic stagnation, after its economic bubble burst in 2000, to understand how this economic stimulus program could be helpful for other countries. 96% of local governments issued discount shopping coupons as part of the central government-led Regional Consumption Stimulation and Life Support Program (Chiiki Shohi Kanki-Chiiki Shiengata Kofukin Jigyo). Most local governments used a similar method People who purchased these coupons were eligible for a 20% discount. Some authors reported that these coupon programs had significant economic effects; neither their long-term effect nor their purchasing patterns were thoroughly investigated

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