In response to the shock of the COVID-19 pandemic, the US Congress pumped trillions of dollars into the economy in the form of stimulus checks, expanded unemployment benefits, and targeted spending to bolster specific industries such as airlines.

The massive package apparently staved off a long, deep recession. But which elements were the most effective in the complicated, intertwined modern American economy?

Some research, involving pre-pandemic data, suggests that stimulus directed to households is most effective when it’s targeted to people who need it most.

In a new working paper, researchers found that, to get the maximum bang for the buck in spurring the economy, lawmakers should give stimulus money to the people who will spend the most of it rather than sock it away in savings, as many Americans did with COVID-19 relief checks.

Technically, these are the groups with the highest marginal propensity to consume, or MPC.

“Our estimates suggest that government transfers of $1,000 to each employed worker would increase GDP by 69 cents per dollar spent, whereas transfers of $2,000 to each worker with above-median MPC would increase GDP by 96 cents per dollar spent,” writes Christina Patterson, an assistant professor at the University of Chicago’s Booth School of Business, with coauthors Joel P. Flynn and John Sturm, PhD students at MIT.

Read the full article about stimulus cash at Futurity.