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What and how did people buy during the Great Lockdown? Evidence from electronic payments

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  • Bruno Carvalho
  • Susana Peralta
  • Joao Pereira dos Santos

Abstract

This paper uses novel and comprehensive data on electronic payments from SIBS, the main provider of point of sale terminals and on-line payments in Portugal, to study the impact of the Great Lockdown on purchases. The data aggregates all individual transactions into monthly observations, by municipality and sector, between 2018 and 2020. We employ a difference-in-differences event study that relies on the assumption that the monthly evolution of purchases in the first four months of 2020 would be parallel to that of the two previous years. We identify a massive causal impact on overall purchases, from a baseline year-on-year monthly growth rate of 10% to a decrease of 45%. The sign and magnitude of the impact varies considerably across sectors. Purchases of essential goods such as supermarkets and groceries increase mildly, contrasting with severe contractions in sectors that were closed by government order or depend heavily on tourism, including the leisure industry and restaurants. We find suggestive evidence of initial stockpiling of goods, postponing of essential expenditures, and rapid recovery of purchases in tech and entertainment, possibly to adapt to the confinement. Transactions with foreign-owned cards cause an even greater negative contraction. We disentangle the total effect into the intensive margin of the average transaction and the extensive margin of the number of transactions. Buyers adjust their shopping strategies in rational ways to minimize public health risks: they go less often to supermarkets and buy more each time, and visit local groceries more.

Suggested Citation

  • Bruno Carvalho & Susana Peralta & Joao Pereira dos Santos, 2020. "What and how did people buy during the Great Lockdown? Evidence from electronic payments," Working Papers ECARES 2020-20, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/307531
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    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Economics of Welfare > Health Economics > Economics of Pandemics > Specific pandemics > Covid-19 > Economic consequences > Consumption

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    Cited by:

    1. Wright, Austin L. & Sonin, Konstantin & Driscoll, Jesse & Wilson, Jarnickae, 2020. "Poverty and economic dislocation reduce compliance with COVID-19 shelter-in-place protocols," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 544-554.
    2. Gabe, Todd & Florida, Richard, 2021. "Impacts of Jobs Requiring Close Physical Proximity and High Interaction with the Public on U.S. Industry Employment Change During the Early Stages of the COVID-19 Pandemic," MPRA Paper 105702, University Library of Munich, Germany.
    3. Bui, Dzung & Dräger, Lena & Hayo, Bernd & Nghiem, Giang, 2020. "Consumer Sentiment During the COVID-19 Pandemic: The Role of Others‘ Beliefs," Hannover Economic Papers (HEP) dp-680, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät, revised Apr 2021.
    4. Gabe, Todd & Crawley, Andrew, 2020. "A Note on the Reduction in Hospitality Sales Prior to a State’s COVID-related Stay-at-Home Order: Evidence from Maine, USA," MPRA Paper 102362, University Library of Munich, Germany.
    5. Bruno Carvalho & Susana Peralta & Joao Pereira dos Santos, 2020. "Regional and Sectorial Impacts of the Covid-19 Crisis: Evidence from Electronic Payments," Working Papers ECARES 2020-48, ULB -- Universite Libre de Bruxelles.

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    More about this item

    Keywords

    Portugal; Covid-19; transaction data; consumer behavior; sectoral impacts;
    All these keywords.

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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