We analyze two noncontributory Mexican pension programs for the elderly. Both paid similar amounts, but one paid monthly while the other paid every two months. The Life Cycle Hypothesis suggests frequency of benefits payments should not affect consumption smoothing, but we find the monthly program was more effective in smoothing food expenditure. It also increased doctor visits and reduced the incidence of hunger spells. Under the bimonthly program, expenditures on food significantly decline between paychecks but ownership of durable goods increased. This suggests the importance of payment frequency in social programs.

Previous empirical literature has found a sharp decline in consumption during the first years of retirement, implying that individuals do not save enough for their retirement. This phenomenon is called the retirement consumption puzzle. We find no evidence of the retirement consumption puzzle using panel data from 1980 to 2000. Consumption is defined as nondurable expenditure, a more comprehensive measure than only food used in many of the previous studies. We find that food expenditure declines at retirement, which is consistent with previous studies.