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A Penny Saved: Prices and the Timing of Paycheck Receipt

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  • Beatty, Timothy K.M.

Abstract

This paper explores a puzzling empirical regularity: households pay less for foods as the time since receipt of their last paycheck increases. I leverage randomization with regard to paycheck timing to causally identify the effect of time since paycheck receipt on prices. Estimates of the decline in prices range between 5% and 6% percent, over the course of a month. I investigate several potential explanations for this behavior, including credit constraints and stockpiling. I find evidence that the effect is driven by low-income households and exacerbated by stockpiling behavior.

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File URL: http://purl.umn.edu/61008
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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado with number 61008.

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Date of creation: 2010
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Handle: RePEc:ags:aaea10:61008

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Related research

Keywords: Unit Values; Paycheck Timing; Permanent Income Hypothesis; Consumer/Household Economics; D91; E21;

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  1. Looney, Adam & Kroft, Kory & Chetty, Raj, 2009. "Salience and Taxation: Theory and Evidence," Scholarly Articles 9748525, Harvard University Department of Economics.
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