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The First of the Month Effect: Consumer Behavior and Store Responses

Author Info

Listed author(s):
  • Justine Hastings
  • Ebonya Washington

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)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.2.142
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Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 2 (2010)
Issue (Month): 2 (May)
Pages: 142-162

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Handle: RePEc:aea:aejpol:v:2:y:2010:i:2:p:142-62
Note: DOI: 10.1257/pol.2.2.142
Contact details of provider: Web page: https://www.aeaweb.org/aej-policy
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Find related papers by JEL classification:
  • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
  • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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  1. Altonji Joseph G & Villanueva Ernesto, 2007. "The Marginal Propensity to Spend on Adult Children," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-52, February.
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Cited by:

  1. Damon, Amy L. & King, Robert P. & Leibtag, Ephraim, 2013. "First of the month effect: Does it apply across food retail channels?," Food Policy, Elsevier, vol. 41(C), pages 18-27.
  2. Lorenzo Almada & Ian McCarthy & Rusty Tchernis, 2016. "What Can We Learn about the Effects of Food Stamps on Obesity in the Presence of Misreporting?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(4), pages 997-1017.
  3. Berg, Nathan & Kim, Jeong-Yoo, 2010. "Demand for Self Control: A model of Consumer Response to Programs and Products that Moderate Consumption," MPRA Paper 26593, University Library of Munich, Germany.
  4. Rusty Tchernis & Lorenzo N. Almada, 2016. "Measuring Effects of SNAP on Obesity at the Intensive Margin," Working Papers 2016-019, Human Capital and Economic Opportunity Working Group.
  5. Fiedler, John L. & Mwangi, Dena M., 2016. "Improving household consumption and expenditure surveys’ food consumption metrics: Developing a strategic approach to the unfinished agenda:," IFPRI discussion papers 1570, International Food Policy Research Institute (IFPRI).
  6. Michael Grubb, 2015. "Behavioral Consumers in Industrial Organization: An Overview," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(3), pages 247-258, November.
  7. Zaffou, Madiha & Campbell, Benjamin & Rabinowitz, Adam, 2016. "Spillover Effect of Participation in Women, Infant and Children (WIC) Program on Consumer’s Purchasing Behavior of Private Label Goods," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230100, Southern Agricultural Economics Association.
  8. Manisha Shah & Bryce Millett Steinberg, 2015. "Workfare and Human Capital Investment: Evidence from India," NBER Working Papers 21543, National Bureau of Economic Research, Inc.
  9. Hinnosaar, Marit, 2016. "Time inconsistency and alcohol sales restrictions," European Economic Review, Elsevier, vol. 87(C), pages 108-131.
  10. Cawley, John, 2015. "An economy of scales: A selective review of obesity's economic causes, consequences, and solutions," Journal of Health Economics, Elsevier, vol. 43(C), pages 244-268.
  11. Dave, Dhaval M. & Kelly, Inas Rashad, 2012. "How does the business cycle affect eating habits?," Social Science & Medicine, Elsevier, vol. 74(2), pages 254-262.
  12. White, Justin S. & Basu, Sanjay, 2016. "Does the benefits schedule of cash assistance programs affect the purchase of temptation goods? Evidence from Peru," Journal of Health Economics, Elsevier, vol. 46(C), pages 70-89.
  13. Ashok Kaul & Gregor Pfeifer & Stefan Witte, 2016. "The incidence of Cash for Clunkers: Evidence from the 2009 car scrappage scheme in Germany," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(6), pages 1093-1125, December.
  14. Matias Busso & Sebastian Galiani, 2014. "The Causal Effect of Competition on Prices and Quality: Evidence from a Field Experiment," NBER Working Papers 20054, National Bureau of Economic Research, Inc.
  15. Baylis, Katherine R. & Fan, Linlin & Gundersen, Craig & Michele, Ver Ploeg & James, Ziliak, 2014. "The Location and Timing of SNAP Purchases," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170200, Agricultural and Applied Economics Association.
  16. Carman, Katherine Grace & Zamarro, Gema, 0. "Does Financial Literacy Contribute To Food Security?," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 4.

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