Here's an interesting finding: In 2011, Singaporeans started spending more money the moment they heard the government was giving them cash payouts.

In other words, even before Singaporeans received the Growth Dividend payout of between S$600 and S$800 given only to local citizens, they already enjoyed the sensation of a mini windfall and were more generous in their purchases.

To reiterate: Your brain makes you feel rich even before you have the money.

200,000 people tracked

How was this phenomenon even measured? It was partly out of sheer luck as the 2011 cash payout was a surprise redistribution of resources by the government.

The National University of Singapore Business School, at that time, was studying almost 200,000 individuals whose credit and debit card expenses were documented.

The records were for six months prior to the unexpected February 2011 announcement of a cash payout and six months after the money was disbursed.

In total, 2.1 million adult Singaporeans received their payout by May 1, 2011

Locals vs foreigners

To single out Singaporeans and the effect the extra money had on them, locals and foreigners were identified and formed two matched samples in terms of age, gender, property type and occupation for valid comparisons.

This was to assess the impact of the cash bonus given only to Singaporeans.

What researchers found

It was discovered that for every S$1 in cash bonus received, Singaporeans spent on average eight cents more per month for the 10-month period after the announcement.

This worked out to spending 80 cents per $1 received.

What was surprising was this: Singaporeans responded almost immediately upon hearing the announcement, even though they had not received the cash.

Singaporeans immediately spent 7.4 cents more per month for every S$1 expected in the two-month announcement period.

This level is close to the monthly expenditure of 8.1 cents more during the disbursement period.

How was the extra spending possible?

Short answer: Live on future money via credit.

The immediate increase in spending before the payout was primarily concentrated on credit card usage -- 6.1 cents per month for S$1 expected.

There was no change in debit card spending during the announcement period.

But when the bonus was disbursed, debit card usage rose, while credit card spending continued to be high.

Singaporeans, it was found, were very responsive to spending when incentivised to do so.

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Implications

The SG Bonus is between S$100 and S$300 to be given out this 2018.

This is less than half of what Singaporeans received in 2011.

But economic conditions now and in 2011 are rather similar: Sluggish but picking up, and generally still optimistic.

So, it remains to be seen whether this smaller quantum in payouts is sufficiently enticing enough to stimulate spending.

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