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Consumption Inequality and the Frequency of Purchases

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  • Olivier Coibion
  • Yuriy Gorodnichenko
  • Dmitri Koustas

Abstract

We document a decline in the frequency of shopping trips in the U.S. since 1980 and consider its implications for the measurement of consumption inequality. A decline in shopping frequency as households stock up on storable goods (i.e. inventory behavior) will lead to a rise in expenditure inequality when the latter is measured at high frequency, even when underlying consumption inequality is unchanged. We find that most of the recently documented rise in expenditure inequality in the U.S. since the 1980s can be accounted for by this phenomenon. Using detailed micro data on spending which we link to data on club/warehouse store openings, we directly attribute much of the reduced frequency of shopping trips to the rise in club/warehouse stores.

Suggested Citation

  • Olivier Coibion & Yuriy Gorodnichenko & Dmitri Koustas, 2017. "Consumption Inequality and the Frequency of Purchases," NBER Working Papers 23357, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23357
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    References listed on IDEAS

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    1. Dirk Kreuger & Fabrizio Perri, 2002. "Does Income Inequality Lead to Consumption Inequality? Evidence and Theory," Working Papers 02-15, New York University, Leonard N. Stern School of Business, Department of Economics.
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    Cited by:

    1. Erich Battistin & Lorenzo Neri, 2017. "School Performance, Score Inflation and Economic Geography," Working Papers 837, Queen Mary University of London, School of Economics and Finance.
    2. repec:eee:moneco:v:88:y:2017:i:c:p:70-89 is not listed on IDEAS

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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