Consumption Inequality and the Frequency of Purchases

41 Pages Posted: 31 Jul 2017

See all articles by Olivier Coibion

Olivier Coibion

University of Texas at Austin

Yuriy Gorodnichenko

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Dmitri Koustas

University of California, Berkeley - Department of Economics

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Abstract

We document a decline in the frequency of shopping trips in the U.S. 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 U.S. 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.

Keywords: consumption inequality, expenditure inequality

JEL Classification: D31, E21, D63

Suggested Citation

Coibion, Olivier and Gorodnichenko, Yuriy and Koustas, Dmitri, Consumption Inequality and the Frequency of Purchases. IZA Discussion Paper No. 10882, Available at SSRN: https://ssrn.com/abstract=3010659 or http://dx.doi.org/10.2139/ssrn.3010659

Olivier Coibion (Contact Author)

University of Texas at Austin ( email )

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Austin, TX Texas 78712
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Yuriy Gorodnichenko

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

HOME PAGE: http://www.econ.berkeley.edu/~ygorodni/index.htm

National Bureau of Economic Research (NBER) ( email )

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IZA Institute of Labor Economics ( email )

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Dmitri Koustas

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

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