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Is There a Heat or Eat Trade-off in the UK?

  • Timothy K.M. Beatty

    (University of Minnesota Institute for Fiscal Studies)

  • Laura Blow

    (Institute for Fiscal Studies)

  • Thomas F. Crossley

    ()

    (Koç University , University of Cambridge and Institute for Fiscal Studies)

We merge detailed household level expenditure data from older households with historical local weather information. We then test for a heat or eat trade off: do households cut back on food spending to finance the additional cost of keeping warm during cold shocks? For households who cannot smooth consumption over time, cold weather shocks are equivalent to income shocks. We find evidence that the poorest of older households are unable to smooth spending over the worst temperature shocks. Statistically significant reductions in food spending are observed in response to winter temperatures two or more standard deviations colder than expected (which occur about one winter month in forty) and reductions in food expenditure are considerably larger in poorer households.

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File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1133.pdf
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Paper provided by Koc University-TUSIAD Economic Research Forum in its series Koç University-TUSIAD Economic Research Forum Working Papers with number 1133.

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Length: 20 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:koc:wpaper:1133
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  1. Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, vol. 82(1), pages 15-33, March.
  2. Jayanta Bhattacharya & Thomas DeLeire & Steven Haider & Janet Currie, 2002. "Heat or Eat? Cold Weather Shocks and Nutrition in Poor American Families," NBER Working Papers 9004, National Bureau of Economic Research, Inc.
  3. Martin Browning & Thomas F. Crossley, 2009. "Shocks, Stocks, and Socks: Smoothing Consumption Over a Temporary Income Loss," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1169-1192, December.
  4. Bruce D. Meyer & James X. Sullivan, 2003. "Measuring the Well-Being of the Poor Using Income and Consumption," NBER Working Papers 9760, National Bureau of Economic Research, Inc.
  5. Dora Gicheva & Justine Hastings & Sofia Villas-Boas, 2010. "Investigating Income Effects in Scanner Data: Do Gasoline Prices Affect Grocery Purchases?," American Economic Review, American Economic Association, vol. 100(2), pages 480-84, May.
  6. Martin Browning & Thomas Crossley, 2003. "Shocks, Stocks and Socks," Department of Economics Working Papers 2003-07, McMaster University.
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