Consumption Inequality and the Frequency of Purchases
- American Economic Journal: Macroeconomics (Forthcoming)
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.
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