Consumption Inequality and the Frequency of Purchases
AbstractWe document a decline in the frequency of shopping trips in the United States since 1980 and consider its implications for the measurement of consumption inequality. A decline in shopping frequency as households stock up on storable goods (i.e., inventory behavior) will lead to a rise in expenditure inequality when the latter is measured at high frequency, even when underlying consumption inequality is unchanged. We find that most of the recently documented rise in expenditure inequality in the United States since the 1980s can be accounted for by this phenomenon. Using detailed micro data on spending, which we link to data on club/warehouse store openings, we directly attribute much of the reduced frequency of shopping trips to the rise in club/warehouse stores.
CitationCoibion, Olivier, Yuriy Gorodnichenko, and Dmitri Koustas. 2021. "Consumption Inequality and the Frequency of Purchases." American Economic Journal: Macroeconomics, 13 (4): 449-82. DOI: 10.1257/mac.20190115
- D12 Consumer Economics: Empirical Analysis
- D31 Personal Income, Wealth, and Their Distributions
- D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- E21 Macroeconomics: Consumption; Saving; Wealth