The First of the Month Effect: Consumer Behavior and Store Responses
- 1 May 2010
- journal article
- Published by American Economic Association in American Economic Journal: Economic Policy
- Vol. 2 (2), 142-162
- https://doi.org/10.1257/pol.2.2.142
Abstract
Previous research has demonstrated that benefit recipients decrease expenditures on, and consumption of, food throughout the benefit month. Using detailed grocery store scanner data, we ask two questions: whether cycling is due to a desire for variety that leads to within-month substitution across product quality, and whether cycling is driven by countercyclical retail pricing. We find that the decrease in food expenditures is largely driven by reductions in quantity, not quality, and that prices for foods purchased by benefit households vary pro-cyclically with demand, implying that households could save money by delaying their food purchases until later in the month. (JEL D12, I38)Keywords
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