When people get unexpected money, they spend 80 percent on cars within three months

When the US government sent stimulus checks in 2008, households immediately spent most of the money on durable goods — mostly cars, bought with loans. This means people don't save unexpected income the way older economic models predicted; they spend it fast, and they borrow to do it.

For decades, economists built models of how people spend money based on the assumption that unexpected cash gets saved or spent slowly. This paper shows the opposite: households treat temporary income like permission to buy something they were already planning to finance anyway. The practical effect is that stimulus programs work faster than predicted, but also that household debt rises more than models expect. It changes how governments should think about the timing and size of income support.