NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The First of the Month Effect: Consumer Behavior and Store Responses

Justine S. Hastings, Ebonya L. Washington

NBER Working Paper No. 14578
Issued in December 2008
NBER Program(s):   IO   PE

Previous research has used survey and diary data to carefully document that Food Stamp recipients decrease their expenditures and consumption of food throughout the benefit month, the beginning of which is defined by the date on which benefits are distributed. The reliance on survey and diary data has meant that researchers could not test two rational hypotheses for why food consumption cycles. Using detailed grocery store scanner data we ask 1) whether cycling is due to a desire for variation in foods consumed that leads to substitution across product quality within the month and 2) whether cycling is driven by countercyclical pricing by grocery retailers. We find support for neither of these hypotheses. We find that the decrease in food expenditures is largely driven by reductions in food quantity, not quality, and that prices for foods purchased by benefit households vary pro-cyclically with demand implying that benefit households could save money by delaying their food purchases until later in the month. The price effects are small relative to demand changes and relative to impacts found for other subsidy programs such as EITC, suggesting that most of the benefits accrue to the intended recipients particularly in product categories and stores where benefit recipients represent a small fraction of overall demand. We conclude by concurring with previous literature that food cycling behavior is most likely due to short-run impatience.

download in pdf format
   (332 K)

email paper

This paper is available as PDF (332 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14578

Published: Justine Hastings & Ebonya Washington, 2010. "The First of the Month Effect: Consumer Behavior and Store Responses," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 142-62, May.

Users who downloaded this paper also downloaded these:
Evans, Ringel, and Stech Tobacco Taxes and Public Policy to Discourage Smoking
Nevo w16511 Empirical Models of Consumer Behavior
Kearney w9330 State Lotteries and Consumer Behavior
Hastings and Ashton w14538 Financial Literacy, Information, and Demand Elasticity: Survey and Experimental Evidence from Mexico
Brunner, Ross, and Washington w16835 Does Less Income Mean Less Representation?
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us