Working Paper: NBER ID: w26949
Authors: Scott R. Baker; Ra Farrokhnia; Steffen Meyer; Michaela Pagel; Constantine Yannelis
Abstract: We explore how household consumption responds to epidemics, utilizing transaction-level household financial data to investigate the impact of the COVID-19 virus. As the number of cases grew, households began to radically alter their typical spending across a number of major categories. Initially spending increased sharply, particularly in retail, credit card spending and food items. This was followed by a sharp decrease in overall spending. Households responded most strongly in states with shelter-in-place orders in place by March 29th. We explore heterogeneity across partisan affiliation, demographics and income. Greater levels of social distancing are associated with drops in spending, particularly in restaurants and retail.
Keywords: COVID-19; Household Consumption; Epidemic Response
JEL Codes: D14; E21; G51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| COVID-19 outbreak (H12) | household spending (D10) |
| shelter-in-place orders (R28) | household spending (D10) |
| shelter-in-place orders (R28) | grocery spending (D19) |
| shelter-in-place orders (R28) | restaurant spending (Z31) |
| partisan affiliation (D72) | spending behavior (D12) |
| having children (J13) | stockpiling behavior (D14) |
| age (J14) | spending behavior (D12) |