Jonathan Ernst/Reuters

Loss of income, even temporarily, can be nerve-wracking. But couple it with an economic downturn that has left wages stagnant for years, meaning less savings to fall back on, and suddenly such an event can become an all-out disaster.

In economics, the process of trying to balance one's level of spending and saving throughout periods of both feast and famine is known as consumption smoothing. A recent study from NBER takes a look at how federal employees managed and manipulated their finances during the 2013 government shutdown in an attempt to figure out how such "smoothing" works in reality.

The 2013 shutdown which lasted from October 1 through October 16 left approximately 850,000 federal employees at home on unpaid leave as a result of lawmakers' inability to pass a new budget. The study used information collected by a mobile-banking app, Mint Bills, to parse financial data for federal employees whose income was subject to delay or decrease due to furlough. The research showed that, though workers were eventually paid for the days they missed, for one pay period many saw their paychecks drop by 40 percent.

But though the pain of the cut was temporary, and arguably small, it wasn't without consequence: Researchers found that affected government employees reined in their weekly spending by about 20 percent, or roughly half of their income loss. Spending returned to more normal levels during the next full pay period.

Travis Cooke, who was a 25-year-old Senate staffer at the time of the shutdown, says that while furlough meant a chance to sleep in and catch up on TV, finances were definitely on his mind in the days leading up to, and after the government closures. “Initially I thought that it would be about a week,” he said of the the shutdown. But as it wore on, Cooke says that he and other staffers realized that the shutdown could last more than a few days, and that might have some financial implications. “It was the October 20th paycheck that was in jeopardy. It was a bit unsettling because that paycheck is where I drew rent from."

“My contingency plan was to pinch pennies,”  Cooke said. “During that whole time I was in limbo I was sitting at home enjoying the things that were already paid for such as cable and Internet. And cleaning out the refrigerator or loading up on microwaveable meals, because had that paycheck not come in, I would've looked pretty silly eating $15 lunches every day.”

The study's authors, Michael Gelman and David Shapiro of the University of Michigan, Dan Silverman of the University of Arizona, and Shachar Kariv and Steven Tadelis of the U.C. Berkley, found that in order to balance consumption and spending during a period with decreased pay, furloughed workers were likely to delay recurring payments for things like paying off credit card balances or mortgage payments. And they held off on transferring funds to asset accounts in order to free up income with minimal punitive costs. Some of those who had less liquidity, in the form of a savings account for instance, wound up relying on more expensive credit options, such as making late payments on revolving credit card debt or increasing their debt levels, which also resulted in higher interest charges. These workers were still holding excess debt several months after the shutdown was resolved.

Though the economic hardship was short-lived, it was still stress inducing, particularly for workers who had fewer options when it came to manipulating their finances in order to balance their normal consumption. “I was cooped up in an overpriced apartment unsure of whether or not I'd have to dip into savings to make rent,” Cooke remembers. “It was definitely an unsettling and disheartening experience.”

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