Working Paper: NBER ID: w21318
Authors: Aviv Nevo; Arlene Wong
Abstract: We document a change in household shopping behavior during the Great Recession. Households purchased more on sale, larger sizes and generic products, increased coupon usage, and shopping at discount stores. We estimate that the returns to these shopping activities declined during the recession and therefore this behavior implies a significant decrease in households’ opportunity cost of time. Using the estimated cost of time and time use data, we estimate a high elasticity of substitution between market expenditure and time spent on non-market work. We find that households smooth a sizable fraction of consumption by varying their time allocation during recessions.
Keywords: Elasticity of substitution; Time use; Market goods; Great Recession
JEL Codes: D12; E31; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Household shopping behavior changes (D19) | Increase in shopping intensity (L81) |
| Increase in shopping intensity (L81) | Decrease in opportunity cost of time (J29) |
| Decrease in opportunity cost of time (J29) | Increase in shopping activities returns (L81) |
| Households smooth consumption (D10) | Reallocation of time towards nonmarket activities (J29) |
| Elasticity of substitution between market expenditure and time spent on nonmarket work (J29) | Consumption smoothing (D15) |
| Recession (E32) | Changes in household shopping behavior (D19) |