Consumer Behavior in Grocery Shopping: The role of Income in Food Choice and Price Sensitivity

This paper investigates how income influences consumer behavior in grocery shopping, focusing on food choices and price sensitivity. We introduce a behavioral framework grounded in a two-stage “putty-clay” decision-making process. In the flexible “putty” phase, consumers filter out items from the set of all alternatives based on price- and preference-related rationales; in the more rigid “clay” phase, choices are made from a constrained set that becomes habitual over time. We hypothesize that low-income consumers form smaller and more rigid sets due to budget constraints and perceived unaffordability, limiting their responsiveness to price changes. Using detailed purchase data from the NielsenIQ Consumer Panel, we find that choice set size increases with income and that price sensitivity is attenuated within the constrained sets. These findings challenge standard demand models by revealing that low-income consumers, while generally price-sensitive, may fail to adjust optimally due to behavioral and structural constraints. Our framework highlights how the two-stage choice process contributes to food and nutrition insecurity, offering implications for policy interventions aimed at expanding choice flexibility and improving food access for economically vulnerable populations.