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Is it good to be bad or bad to be good?: Assessing the aggregate impact of abnormal weather on consumer spending

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Abstract

Although the influence of exceptional weather on individual behaviour has already been acknowledgedin finance, psychology, and marketing, the literature examining weather effects at more aggregate levelis still limited. Further, there is a lot of anecdotal evidence that weather anomalies affect consumerspending and retail business. The main aim of this analysis is to investigate and quantify the effectsof unusual weather in consumer spending at macro-level. Using aggregate retail sales data for Switzer-land, our findings reveal that weather deviations from seasonal norms, especially, unusually high or lowtemperatures in a given month, do cause sizeable intertemporal shifts in consumer spending at countrylevel. Furthermore, the effects of abnormal weather are found to differ across seasons, both with respectto sign and magnitude. In particular, our findings indicate that weather effects manifest mainly throughthe seasons change channel: weather conditions in line with the coming season boost the purchases earlyin the season.

Suggested Citation

  • Boriss Siliverstovs & Anna Sandqvist, 2018. "Is it good to be bad or bad to be good?: Assessing the aggregate impact of abnormal weather on consumer spending," KOF Working papers 18-443, KOF Swiss Economic Institute, ETH Zurich.
    • Handle: RePEc:kof:wpskof:18-443
    DOI: 10.3929/ethz-b-000298425
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    1. Boriss Siliverstovs & Rainald Ötsch & Claudia Kemfert & Carlo Jaeger & Armin Haas & Hans Kremers, 2008. "Climate Change and Modelling of Extreme Temperatures in Switzerland," Discussion Papers of DIW Berlin 840, DIW Berlin, German Institute for Economic Research.
    2. Murray, Kyle B. & Di Muro, Fabrizio & Finn, Adam & Popkowski Leszczyc, Peter, 2010. "The effect of weather on consumer spending," Journal of Retailing and Consumer Services, Elsevier, vol. 17(6), pages 512-520.
    3. Michael Boldin & Jonathan H. Wright, 2015. "Weather-Adjusting Economic Data," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(2 (Fall)), pages 227-278.
    4. Martha Starr-McCluer, 2000. "The effects of weather on retail sales," Finance and Economics Discussion Series 2000-08, Board of Governors of the Federal Reserve System (U.S.).
    5. David F. Hendry & Katarina Juselius, 2001. "Explaining Cointegration Analysis: Part II," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 75-120.
    6. Meghan R. Busse & Devin G. Pope & Jaren C. Pope & Jorge Silva-Risso, 2015. "The Psychological Effect of Weather on Car Purchases," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(1), pages 371-414.
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    More about this item

    Keywords

    Consumer spending; intertemporal shifts; retail sales; unusual weather;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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